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 70th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 185.83% on a DCF basis. The most interesting components of our discounted cash flow analysis for Rio Tinto Ltd ended up being:
The company's debt burden, as measured by earnings divided by interest payments, is 22.94; that's higher than 88.66% 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 2%; for context, that number is higher than 29.18% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Basic Materials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as RIO, try POL, CE, UFPI, CRH, and BCC.
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