Facts You Need to Understand Rio Tinto Plc Stock

Rio Tinto Plc logged a -2.7% change during today's evening session, and is now trading at a price of $63.82 per share.

Rio Tinto Plc returned gains of 16.0% last year, with its stock price reaching a high of $80.52 and a low of $50.92. Over the same period, the stock outperformed the S&P 500 index by 6.0%. More recently, the company's 50-day average price was $64.62. Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. Based in London, United Kingdom, the large-cap Basic Materials company has 54,000 full time employees. Rio Tinto Plc has not offered a regular dividend during the last year.

Exceptional Profitability Overshadowed by Excessive Leverage:

2018-01-01 2019-01-01 2020-01-01 2021-01-01
Revenue (MM) $40,030 $40,522 $43,165 $44,611
Gross Margins 60.5% 59.1% 36.7% 41.2%
Operating Margins 31.6% 30.6% 35.3% 39.8%
Net Margins 21.89% 33.66% 18.56% 1.41%
Net Income (MM) $8,762 $13,638 $8,010 $631
Net Interest Expense (MM) -$838 -$616 -$254 -$127
Depreciation & Amort. (MM) -$4,375 -$4,015 n/a n/a
Earnings Per Share $1.23 $1.93 $1.22 $7.62
EPS Growth n/a 56.91% -36.79% 524.59%
Diluted Shares (MM) 7,147 7,072 6,568 1,622
Free Cash Flow (MM) $18,366 $17,251 $20,351 $27,966
Capital Expenditures (MM) -$4,482 -$5,430 -$5,439 -$6,144
Net Current Assets (MM) -$25,933 -$20,224 -$25,257 -$24,632
Current Ratio 1.65 1.92 1.56 0.62
Long Term Debt (MM) $14,575 $12,401 $12,086 n/a
LT Debt to Equity 0.29 0.25 0.27 n/a

Rio Tinto Plc benefits from stable revenues and increasing reinvestment in the business, strong margins with a positive growth rate, and exceptional EPS growth. The company's financial statements show wider gross margins than its peer group and consistent free cash flow. However, the firm has high levels of debt.

A Very Low P/E Ratio but Trades Above Its Graham Number:

Rio Tinto Plc has a trailing twelve month P/E ratio of 8.5, compared to an average of 10.03 for the Basic Materials sector. Based on its EPS guidance of $4.21, the company has a forward P/E ratio of 15.3. According to the 27.9% compound average growth rate of Rio Tinto Plc's historical and projected earnings per share, the company's PEG ratio is 0.3. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.7%. On this basis, the company's PEG ratio is 0.79. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing Rio Tinto Plc in terms of its equity because its P/B ratio is 2.06 whereas the sector average is 2.08. The company's shares are currently trading 39.6% above their Graham number.

Analysts Give Rio Tinto Plc No Average Rating Visible In Our Data:

The 4 analysts following Rio Tinto Plc have set target prices ranging from $73.9 to $92.0 per share, for an average of $80.22 with a buy rating. As of April 2023, the company is trading -19.4% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

The largest shareholder is Fisher Asset Management, LLC, whose 1% stake in the company is worth $930,535,100.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.