The Fortescue Metals Group Limited (ASX: FMG) share price has collapsed around 15% since the beginning of the year. This comes as the fourth largest iron ore miner has experienced a declining spot price of the steel making ingredient.
At Friday’s market close, Fortescue shares finished the day flat at $20. It’s worth noting that its shares have fallen off a cliff after hitting a record high of $26.58 in late July.
What happened to Fortescue shares last earnings season?
During the time when Fortescue reported its half-year results for FY21, its shares plummeted 11.5% within two weeks.
Initially, investors were excited about the company’s performance, as it highlighted a 44% increase in revenue and a strong dividend payout. Furthermore, shipments, earnings and operating cash flow surpassed any half year in Fortescue’s history.
Fortescue CEO, Elizabeth Gaines commented:
Fortescue’s performance for the first half of FY21 has been outstanding, and we are very proud of the whole team who have delivered our best half year operating and financial results since the Company was established.
However, this was quickly forgotten as attention turned to Chinese tariffs and restrictions on Australian goods. Investors appeared to be concerned that China may focus on the country’s largest export market, and were rightly so. In response, the spot price of iron ore tanked, shedding 6.1% of its value to US$163.60 a tonne.
Only late in March, the Fortescue share price rebounded, following a strong uplift in the steel making ingredient spot price.
Is the Fotrescue share price a buy?
A recent broker note released by Bell Potter cut its outlook on Fortescue shares by 8.4% to $22.03. Goldman Sachs also reduced its rating by 2.9% to a more bearish $19.90.
Based on today’s closing Fortescue share price, this is in line with the Goldman Sachs broker estimate.
Fortescue commands a market capitalisation of roughly $61.5 billion, with more than 3 billion shares on its books.
The post The Fortescue (ASX:FMG) share price fell 11.5% last time the company reported appeared first on The Motley Fool Australia.
Should you invest $1,000 in Fortescue right now?
Before you consider Fortescue, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Fortescue wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
More reading
- Fortescue (ASX:FMG) share price tumbles in August, analysts see further declines in iron ore
- August hasn’t been a great month for the Fortescue (ASX:FMG) share price
- These 3 ASX 200 shares were the most heavily traded on Monday
- Pilbara Minerals (ASX:PLS) share price bounces back, up 8% on Monday
- Just how dependent is Fortescue Metals (ASX:FMG) on China?
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3kxYNPL
Leave a Reply