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Rio Tinto PLC ADR RIO

Morningstar Rating
$64.63 +0.67 (1.05%)
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Company Report

Rio Tinto Earnings: Sound Result Due to Iron Ore, the Main Driver of Earnings

No-moat Rio Tinto’s adjusted net profit after tax fell 12% to USD 11.8 billion or USD 7.21 per share, about AUD 10.92, driven by lower aluminum prices and higher unit cash costs. Adjusted EBITDA of USD 23.9 billion was 9% below 2022 but broadly in line with our estimate. The Pilbara iron ore business had a solid year. Average iron ore prices of USD 108 per metric ton were modestly higher than in 2022. Along with 4% higher volumes of about 280 million metric tons and modestly lower unit cash costs of roughly USD 22 per metric ton, close to our forecast, iron ore EBITDA rose 7%. The iron ore business continues to drive Rio’s earnings, comprising 84% of 2023 EBITDA. While Rio’s free cash flow of USD 7.7 billion fell 15% lower, the balance sheet remains very strong. Net debt of about USD 4.2 billion is minimal, roughly 0.2 times EBITDA. Rio will pay a fully franked final dividend of USD 2.58, about AUD 3.91, in April. Total 2023 dividends of USD 4.35 (AUD 6.59) were down 12% on lower earnings, but the 60% payout ratio is at the top end of Rio’s target.

Price vs Fair Value

RIO is trading at a 17% discount.
Price
$63.96
Fair Value
$62.00
Uncertainty
Medium
1-Star Price
$756.89
5-Star Price
$92.60
Economic Moat
Sstk
Capital Allocation
Xbdwdpsk

Bulls Say, Bears Say

Bulls

Rio Tinto is one of the direct beneficiaries of China's continuing strong appetite for natural resources.

Bears

With miners including Rio benefiting from high commodity prices, governments may use it as a source of tax revenue to plug shaky budgets.

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News

Trading Information

Previous Close Price
$63.96
Day Range
$64.6265.03
52-Week Range
$58.2775.30
Bid/Ask
$64.61 / $64.62
Market Cap
$104.86 Bil
Volume/Avg
574,791 / 2.7 Mil

Key Statistics

Price/Earnings (Normalized)
10.16
Price/Sales
1.93
Dividend Yield (Trailing)
6.29%
Dividend Yield (Forward)
6.29%
Total Yield
6.29%

Company Profile

Rio Tinto is a global diversified miner. Iron ore is the dominant commodity, with significantly lesser contributions from copper, aluminum, 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, with shareholders in each company having equivalent economic and voting rights. Major assets included the Pilbara iron ore operations, a 30% stake in the Escondida copper mine, 66%-ownership of the Oyu Tolgoi copper mine in Mongolia, the Weipa and Gove bauxite mines in Australia, and six hydro-powered aluminum smelters in Canada.
Sector
Basic Materials
Industry
Other Industrial Metals & Mining
Stock Style Box
Large Value
Total Number of Employees
57,174

Competitors

Valuation

Metric
RIO
FMG
BHP
Price/Earnings (Normalized)
10.169.5110.70
Price/Book Value
1.902.813.49
Price/Sales
1.932.872.62
Price/Cash Flow
6.316.156.78
Price/Earnings
RIO
FMG
BHP

Financial Strength

Metric
RIO
FMG
BHP
Quick Ratio
1.042.261.08
Current Ratio
1.692.841.57
Interest Coverage
7.7724.667.59
Quick Ratio
RIO
FMG
BHP

Profitability

Metric
RIO
FMG
BHP
Return on Assets (Normalized)
11.84%22.58%13.90%
Return on Equity (Normalized)
22.48%35.67%31.62%
Return on Invested Capital (Normalized)
18.83%27.74%21.70%
Return on Assets
RIO
FMG
BHP
See how this stock stacks up to its competitors with Morningstar Investor

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