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Teck Resources Ltd TECK

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Morningstar’s Analysis

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Elevated Commodity Prices Sees Teck Resources Shares Soar; Shares Now Overvalued

Analyst Note

| Mathew Hodge, CFA |

We retain our CAD 25.00 fair value estimate for no-moat Teck Resources following its first-quarter fiscal 2021 results. Results were in line with our expectations and guidance is unchanged. After suffering substantial asset impairments, write-downs, and COVID-19-related costs in the same period last year, net profit after tax doubled to CAD 305 million. The miner heavily benefitted from increased prices in key commodities--copper and zinc--fuelled mainly by Chinese government stimulus packages aimed at boosting fixed-asset activity. This was despite lower production and sales volumes than the first quarter of 2020. The revenue benefit was partially offset by higher costs related to maintenance and supply, and appreciation of the Canadian dollar.

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Company Profile

Business Description

Teck is a diversified miner with coal, copper, zinc, and oil sands operations in Canada, the United States, Chile, and Peru. Metallurgical coal is Teck's primary commodity in terms of EBITDA contribution, followed by copper, zinc, and oil sands. Teck ranks as the world's second-largest exporter of seaborne metallurgical coal and is a top-three zinc miner. It is building a major new copper mine in Chile at the majority-owned Quebrada Blanca 2, in partnership with Sumitomo.

550 Burrard Street, Suite 3300
Vancouver, BC, V6C 0B3, Canada
T +1 604 699-4000
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 10,000