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Fortescue Ltd FMG

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Stock XASX Rating as of
A$20.35 +0.21 (1.04%)
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Company Report

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Fortescue: Iron Ore Sales Likely to Modestly Increase in Fiscal 2025

Jon Mills

No-moat Fortescue finished fiscal 2024 strongly. Fourth-quarter shipments of 54 million metric tons were a record, 6% above our expectations, and 9% higher than the same quarter of fiscal 2023. They were 24% above the prior quarter, albeit one that was affected by a train derailment and inclement weather. Fiscal 2024 shipments came in at 191 million metric tons, modestly above our expectations but similar to last year. The contribution from its new 69%-owned Iron Bridge mine remains immaterial.

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Price vs Fair Value

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FMG is trading at a 438% premium.
Price
A$20.35
Fair Value
A$33.70
Uncertainty
High
1-Star Price
A$88.98
5-Star Price
A$5.88
Economic Moat
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Capital Allocation
Xcspppjw

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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Trading Information

Previous Close Price
A$20.14
Day Range
A$20.26–20.76
52-Week Range
A$19.28–29.48
Bid/Ask
A$20.34 / A$20.36
Market Cap
A$62.66 Bil
Volume/Avg
8.9 Mil / 6.5 Mil

Key Statistics

Price/Earnings (Normalized)
6.29
Price/Sales
2.25
Dividend Yield (Trailing)
10.22%
Dividend Yield (Forward)
10.61%
Total Yield
10.56%

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 2024 means Fortescue supplies around 10% of global seaborne iron ore. Further expansion above 200 million metric tons is likely once its 22 million metric ton Iron Bridge magnetite mine ramps up, likely in 2026 or 2027. However, with longer-term demand likely to decline as China's economy matures, Fortescue's future margins are likely 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
Website
https://www.fortescue.com

Competitors

Valuation

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Metric
FMG
RIO
BHP
Price/Earnings (Normalized)
 6.2910.6810.41
Price/Book Value
 2.202.353.39
Price/Sales
 2.252.322.54
Price/Cash Flow
 4.837.586.58
Price/Earnings
FMG
RIO
BHP

Financial Strength

Metric
FMG
RIO
BHP
Quick Ratio
 2.261.041.08
Current Ratio
 2.841.691.57
Interest Coverage
 24.668.047.59
Quick Ratio
FMG
RIO
BHP

Profitability

Metric
FMG
RIO
BHP
Return on Assets (Normalized)
 22.58%11.84%13.90%
Return on Equity (Normalized)
 35.67%22.48%31.67%
Return on Invested Capital (Normalized)
 27.74%19.38%21.70%
Return on Assets
FMG
RIO
BHP
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