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Rio Tinto Ltd RIO

Rating as of

Morningstar’s Analysis

Valuation
Currency in AUD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Rio Tinto on Track to Meet Guidance in 2021 but Strong Demand Likely to Abate Through 2021

Analyst Note

| Mathew Hodge, CFA |

No-moat Rio Tinto’s first-quarter 2021 production was mixed with disruptions from weather, COVID-19-led restrictions and maintenance. Importantly, quarterly iron ore shipments, which represent the bulk of Rio Tinto’s earnings, were 7% higher than last year. Rio Tinto remains on track to meet full-year production and unit cost guidance for all commodities. We make no change to our fiscal 2021 forecasts and retain our AUD 88 per share fair value estimate. With Rio Tinto’s most profitable commodities, iron ore and copper, at decade-high prices and levels not seen since the peak of the China boom, the shares look substantially overvalued.

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Company Profile

Business Description

Rio Tinto searches for and extracts a variety of minerals worldwide, with the heaviest concentrations in North America and Australia. Iron ore is the dominant commodity, with significantly lesser contributions from aluminium, copper, diamonds, gold, and industrial minerals. The 1995 merger of RTZ and CRA, via a dual-listed structure, created the present-day company. The two operate as a single business entity. Shareholders in each company have equivalent economic and voting rights.

Contact
360 Collins Street, Level 7
Melbourne, VIC, 3000, Australia
T +61 392833333
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings
Fiscal Year End Dec 31, 2020
Stock Type
Employees 47,474