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Fortescue Ltd FMG

Morningstar Rating
A$26.94 +0.33 (1.24%)
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Company Report

Fortescue: Iron Ore Volumes Disappointing

Inclement weather and a train derailment meant no-moat Fortescue’s third-quarter fiscal 2024 was modestly behind our expectations. Shipments of 43 million metric tons were 7% down on the same quarter of fiscal 2023 and 11% below the prior quarter. Shipments for the first nine months of fiscal 2024 were 138 million metric tons, 4% down on last year, with a contribution from the new 69%-owned Iron Bridge mine remaining immaterial.

Price vs Fair Value

FMG is trading at a 549% premium.
Price
A$26.94
Fair Value
A$75.90
Uncertainty
High
1-Star Price
A$43.39
5-Star Price
A$9.34
Economic Moat
Pymyb
Capital Allocation
Yrmvtsypq

Bulls Say, Bears Say

Bulls

Fortescue provides strong leverage to the Chinese economy. If growth in steel consumption remains strong, it's also likely iron ore prices and volumes will, too.

Bears

We think that ultimately Chinese fixed-asset investment will slow, and future iron ore volume growth and prices are likely to be much less favorable.

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News

Trading Information

Previous Close Price
A$26.61
Day Range
A$26.6127.22
52-Week Range
A$18.9129.95
Bid/Ask
A$26.86 / A$27.07
Market Cap
A$82.95 Bil
Volume/Avg
6.7 Mil / 6.0 Mil

Key Statistics

Price/Earnings (Normalized)
8.33
Price/Sales
2.98
Dividend Yield (Trailing)
7.72%
Dividend Yield (Forward)
8.02%
Total Yield
7.98%

Company Profile

Fortescue is an Australia-based iron ore miner. It has grown from obscurity start of 2008 to become the world's fourth-largest producer. Growth was fueled by debt, now repaid. Expansion from 55 million metric tons in fiscal 2012 to about 190 million metric tons in 2023 means Fortescue supplies nearly 10% of global seaborne iron ore. Further expansion above 200 million metric tons is likely once it completes construction of its 22 million metric tons Iron Bridge magnetite mine. However, with longer-term demand likely to decline as China's economy matures, we expect Fortescue's future margins to be below historical averages. More recently, Fortescue diversified into green energy, with ambitions to become a major supplier of green hydrogen and green ammonia. Its efforts are early stage.
Sector
Basic Materials
Industry
Other Industrial Metals & Mining
Stock Style Box
Large Value
Total Number of Employees
3,898

Competitors

Valuation

Metric
FMG
BHP
VALE
Price/Earnings (Normalized)
8.3311.286.70
Price/Book Value
2.923.671.45
Price/Sales
2.982.751.31
Price/Cash Flow
6.397.134.09
Price/Earnings
FMG
BHP
VALE

Financial Strength

Metric
FMG
BHP
VALE
Quick Ratio
2.261.080.44
Current Ratio
2.841.571.12
Interest Coverage
24.667.598.77
Quick Ratio
FMG
BHP
VALE

Profitability

Metric
FMG
BHP
VALE
Return on Assets (Normalized)
22.58%13.90%10.67%
Return on Equity (Normalized)
35.67%31.67%25.34%
Return on Invested Capital (Normalized)
27.74%21.70%18.70%
Return on Assets
FMG
BHP
VALE
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