How did the Fortescue share price respond last earnings season?

The Fortescue Metals Group Limited (ASX: FMG) share price has travelled lower since the company last reported its results.

This comes as the pure-play iron ore producer tries to navigate its way through the current challenging market environment.

At Friday’s market close, Fortescue shares finished the day down 0.73% to $18.94.

This means its shares are down 12% from when the company delivered its H1 FY22 financial scorecard on 16 February.

Below, we take a closer look to see if investors can learn anything from the company’s last earnings season.

What happened in the first half of FY22?

On the day the company dropped its half-year results to the market, investors sold off the Fortescue share price by 2%.

While this wasn’t by any means a significant fall despite the company recording double-digit losses across key financial metrics, the share price continued to decline.

In fact, over the period from 16 February to 15 March, Fortescue shares sank 20%.

This appeared to be in relation to several brokers weighing in on their thoughts for the mining giant.

While Fortescue shares staged a mini revival in the following weeks, it was short-lived as market confidence deteriorated.

External factors such as a weakened demand on the iron ore outlook mixed with the Chinese property crisis attributed to the cause.

Consequently, Fortescue shares tumbled to a year-to-date low of $16.24 on 15 July before ticking up a notch.

Since this time, the share has gained ground by more than 16% as the broader market begins to recover.

What should investors look out for?

With Fortescue due to report its full year results on 29 August, investors should have a good understanding of what to expect.

This follows the company’s fourth quarter production report which highlighted record iron ore shipments and higher average revenue realisation.

Management summed up the year’s performance with FY22 shipments of 189 million tonnes, exceeding the top end of guidance.

Average revenue of US$99.80/dry metric tonne (dmt) represented revenue realisation of 72% of the average Platts 62% CFR Index of US$137.99/dmt.

However, FY22 C1 cost of US$15.91/wet metric tonne (wmt) was 14% higher than the US$13.93 achieved in the previous year.

Fortescue achieved a net debt position of US$0.9 billion at 30 June 2022, compared with net debt of US$2.4 billion at 31 March 2022.

Fortescue share price snapshot

In 2022, the Fortescue share price is relatively flat on the back of mixed investor sentiment across the resources sector.

For context, the S&P/ASX 200 Resources Index (ASX: XJR) is up 2% over the same time frame.

Fortescue has a price-to-earnings (P/E) ratio of 4.49 and commands a market capitalisation of roughly $58.75 billion.

The post How did the Fortescue share price respond last earnings season? appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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