Rio Tinto mines for and produces aluminum, copper, gold, silver, and molybdenum, nickel, diamonds, titanium dioxide feedstocks, borates, salt, iron, metal powders, zircon, thermal coal, coking or metallurgical coal, uranium, and iron ore. The company was founded in 1873 and is based in London, the United Kingdom.
RIO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Rio Tinto Ltd. To summarize, we found that Rio Tinto Ltd ranked in the 71th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 164.83% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for RIO, they are:
Interest coverage, a measure of earnings relative to interest payments, is 22.94; that's higher than 88.32% of US stocks in the Basic Materials sector that have positive free cash flow.
RIO's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 27.78% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
NGVT, SXC, JELD, VALE, and PGTI can be thought of as valuation peers to RIO, in the sense that they are in the Basic Materials sector and have a similar price forecast based on DCF valuation.
Introductory thesis I am positioning my rating recommendation on Rio Tinto Plc (RIO), a leading international metals and mining company as ‘Neutral’. In my opinion, the company’s strong operating performance, backed by iron ore prices has well rewarded shareholders over the past year, leading the stock to outperform main indices...
Investing Room on Seeking Alpha | January 25, 2021
Simandou in Guinea is home to the world's richest untapped deposits of iron ore but legal wrangling, alleged corruption and the difficulty of access to the mountain region mean it has yet to be developed. On Friday, a Swiss criminal court found Israeli businessman Beny Steinmetz guilty of corruption and sentenced him to five years in jail over a mining deal his company secured for the Simandou project. Steinmetz has said he will appeal the verdict.
Given the current macroeconomic conditions and Rio Tinto’s past, Jay Yao writes what he thinks management will do with the dividend in the coming years. The post What’s next for Rio Tinto’s dividend? appeared first on The Motley Fool UK .