Rio Tinto share price climbs ahead of tomorrow’s earnings update. Here’s what to watch

Miner looking at a tablet.

Miner looking at a tablet.

The Rio Tinto Limited (ASX: RIO) share price is pushing higher on the eve of its half-year results release.

At the time of writing, the mining giant’s shares are up over 2% to $99.20.

Judging by its strong showing, investors appear optimistic that Rio Tinto is going to impress with its half-year update tomorrow.

What is the market expecting from Rio Tinto’s half-year results?

While the market is expecting a strong result from Rio Tinto, it won’t be as strong as this time last year.

According to a note out of Goldman Sachs, both its analysts and the market are expecting the miner to report a reduction in earnings year on year. Here’s a summary of what the market is expecting

  • Revenue
    • Goldman Sachs: US$29,655 million
    • Consensus: US$30,785 million
  • Underlying EBITDA
    • GS: US$15,671 million
    • Consensus: US$16,813 million
  • Dividends per share
    • GS: US$3.18 per share
    • Consensus: US$3.30 per share
  • Special dividends per share
    • GS: US$0.50 per share
    • Consensus: US$0.67 per share

What will the drivers of the result be?

Goldman Sachs is forecasting underlying EBITDA of US$15,671 million, which would be down 25.5% over the prior corresponding period.

This is expected to be driven largely by softer earnings from the key iron ore segment. The broker has pencilled in iron ore EBITDA of US$10,176 million and underlying iron ore earnings of US$6,273 million. This will be a 37% and 39% decline, respectively, over the prior corresponding period.

Offsetting some of this will be the miner’s aluminium business. Goldman is expecting a 51% increase in aluminium EBITDA to US$2,912 million and an 85% increase in underlying earnings to US$1,706 million for the period.

Is the Rio Tinto share price good value?

While buying before a results release can be very risky, Goldman Sachs certainly sees plenty of value in Rio Tinto’s shares at the current level.

Despite forecasting earnings below consensus estimates, the broker has a buy rating and $124.10 price target on the miner’s shares. This implies a potential return of 25% for investors over the next 12 months before dividends.

The post Rio Tinto share price climbs ahead of tomorrow’s earnings update. Here’s what to watch appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Motley Fool contributor James Mickleboro 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/AcsQzZK

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s