ASX:FMG

Stock Analysis Report

Fortescue Metals Group

Executive Summary

Fortescue Metals Group Limited engages in the exploration, development, production, processing, and sale of iron ore in Australia, China, and internationally.

Snowflake

Fundamentals

Outstanding track record with excellent balance sheet.


Similar Companies

Share Price & News

How has Fortescue Metals Group's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-3.5%

FMG

0.05%

AU Metals and Mining

2.5%

AU Market


1 Year Return

105.5%

FMG

10.3%

AU Metals and Mining

11.1%

AU Market

Return vs Industry: FMG exceeded the Australian Metals and Mining industry which returned 10.3% over the past year.

Return vs Market: FMG exceeded the Australian Market which returned 11.1% over the past year.


Shareholder returns

FMGIndustryMarket
7 Day-3.5%0.05%2.5%
30 Day-9.2%-5.6%0.7%
90 Day-6.2%-8.9%1.4%
1 Year138.2%105.5%17.9%10.3%17.5%11.1%
3 Year112.4%61.6%62.5%43.1%37.8%19.4%
5 Year223.2%131.2%56.0%20.7%51.7%17.6%

Price Volatility Vs. Market

How volatile is Fortescue Metals Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Fortescue Metals Group undervalued compared to its fair value and its price relative to the market?

17.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: FMG (A$8.16) is trading below our estimate of fair value (A$9.94)

Significantly Undervalued: FMG is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FMG is good value based on its PE Ratio (5.3x) compared to the Metals and Mining industry average (12.6x).

PE vs Market: FMG is good value based on its PE Ratio (5.3x) compared to the Australian market (18x).


Price to Earnings Growth Ratio

Low PEG Ratio: FMG's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: FMG is overvalued based on its PB Ratio (1.6x) compared to the AU Metals and Mining industry average (1.6x).


Next Steps

Future Growth

How is Fortescue Metals Group forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

-25.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FMG's earnings are forecast to decline over the next 3 years (-25% per year).

Earnings vs Market: FMG's earnings are forecast to decline over the next 3 years (-25% per year).

High Growth Earnings: FMG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FMG's revenue is expected to decline over the next 3 years (-7% per year).

High Growth Revenue: FMG's revenue is forecast to decline over the next 3 years (-7% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: FMG's Return on Equity is forecast to be low in 3 years time (13%).


Next Steps

Past Performance

How has Fortescue Metals Group performed over the past 5 years?

7.3%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: FMG's earnings have grown by 7.3% per year over the past 5 years.

Accelerating Growth: FMG's earnings growth over the past year (262.6%) exceeds its 5-year average (7.3% per year).

Earnings vs Industry: FMG earnings growth over the past year (262.6%) exceeded the Metals and Mining industry 1.3%.


Return on Equity

High ROE: FMG's Return on Equity (30.1%) is considered high.


Return on Assets

ROA vs Industry: FMG has a higher Return on Assets than the Metals and Mining industry average last year.


Return on Capital Employed

ROCE Improving: FMG has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Fortescue Metals Group's financial position?


Financial Position Analysis

Short Term Liabilities: FMG's short term assets ($3.6B) exceeds its short term liabilities ($2.6B)

Long Term Liabilities: FMG's short term assets (3.6B) do not cover its long term liabilities (6.4B)


Debt to Equity History and Analysis

Debt Level: FMG's debt to equity ratio (31.9%) is considered satisfactory

Reducing Debt: FMG's debt to equity ratio has reduced from 121.8% to 31.9% over the past 5 years.

Debt Coverage: FMG's debt is well covered by operating cash flow (129.4%).

Interest Coverage: FMG's interest payments on its debt are well covered by EBIT (21x coverage).


Balance Sheet

Inventory Level: FMG has a high level of physical assets or inventory.

Debt Coverage by Assets: FMG's debt is covered by short term assets (assets are 1.068950x debt).


Next Steps

Dividend

What is Fortescue Metals Group's current dividend yield, its reliability and sustainability?

5.23%

Current Dividend Yield


Dividend Yield vs Market

company5.2%marketbottom25%2.5%markettop25%5.6%industryaverage4.8%forecastin3Years8.9%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: FMG's dividend (5.23%) is higher than the bottom 25% of dividend payers in the Australian market (2.46%).

High Dividend: FMG's dividend (5.23%) is low compared to the top 25% of dividend payers in the Australian market (5.56%).

Stable Dividend: FMG has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: FMG's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (29.2%), FMG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FMG's dividends in 3 years are forecast to be covered by earnings (57.4% payout ratio).


Next Steps

Management

What is the CEO of Fortescue Metals Group's salary, the management and board of directors tenure and is there insider trading?

1.7yrs

Average management tenure


CEO

Elizabeth Gaines (55yo)

1.7yrs

Tenure

US$5,003,888

Compensation

Ms. Elizabeth Anne Gaines, CA, MappFin (Macq) serves as Managing Director at Fortescue Metals Group Limited since August 2018. Ms. Gaines has been Chief Executive Officer at Fortescue Metals Group Limited  ...


CEO Compensation Analysis

Compensation vs. Market: Elizabeth has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the Australian market.

Compensation vs Earnings: Elizabeth's compensation has increased by more than 20% in the past year.


Management Age and Tenure

1.7yrs

Average Tenure

53.5yo

Average Age

Experienced Management: FMG's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Age and Tenure

2.6yrs

Average Tenure

56yo

Average Age

Experienced Board: FMG's board of directors are not considered experienced ( 2.6 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$47,748,25105 Mar 19
Valin Mining Investments (Singapore) Pte. Ltd.
EntityCompany
Shares7,650,000
Max PriceUS$6.24
SellUS$202,060,44905 Mar 19
Valin Resources Investments (Singapore) Pte. Ltd
EntityCompany
Shares32,373,174
Max PriceUS$6.24
BuyUS$116,663,16230 Nov 18
Minderoo Group Pty Ltd
EntityCompany
Shares30,058,660
Max PriceUS$4.00
BuyUS$23,194,01822 Nov 18
John Andrew Forrest
EntityIndividual
Role
Chairman of the Board
Founder & Chairman of the Board
Shares5,877,306
Max PriceUS$3.95
BuyUS$15,004,08931 Oct 18
John Andrew Forrest
EntityIndividual
Role
Chairman of the Board
Founder & Chairman of the Board
Shares3,951,981
Max PriceUS$3.80

Ownership Breakdown


Management Team

  • Peter Huston

    Chief General Counsel & Director of Corporate Services

    • Tenure: 14.8yrs
  • Elizabeth Gaines (55yo)

    CEO, MD & Executive Director

    • Tenure: 1.7yrs
    • Compensation: US$5.00m
  • John Andrew Forrest (57yo)

    Founder & Chairman of the Board

    • Tenure: 16.3yrs
  • Cameron Wilson (52yo)

    Company Secretary

    • Tenure: 0yrs
  • Ian Wells

    Chief Financial Officer

    • Tenure: 1.7yrs
    • Compensation: US$2.33m
  • Greg Lilleyman (52yo)

    Chief Operating Officer

    • Tenure: 1.7yrs
    • Compensation: US$3.23m
  • Linda O'Farrell

    Group Manager of People

    • Tenure: 6yrs
  • Danny Goeman

    Director of Sales & Marketing

    • Tenure: 1.7yrs
  • Alison Terry

    Group Manager of Corporate Affairs & Joint Company Secretary

    • Tenure: 2.7yrs
  • Julie Shuttleworth

    Deputy Chief Executive Officer

    • Tenure: 1.8yrs
    • Compensation: US$2.22m

Board Members

  • Mark Barnaba (56yo)

    Co-Deputy Chair & Lead Independent Director

    • Tenure: 1.9yrs
    • Compensation: US$678.50k
  • Penny Bingham-Hall (59yo)

    Non-Executive Director

    • Tenure: 2.9yrs
    • Compensation: US$203.67k
  • Elizabeth Gaines (55yo)

    CEO, MD & Executive Director

    • Tenure: 1.7yrs
    • Compensation: US$5.00m
  • John Andrew Forrest (57yo)

    Founder & Chairman of the Board

    • Tenure: 16.3yrs
  • Sebastian Coe

    Non Executive Director

    • Tenure: 1.7yrs
    • Compensation: US$177.10k
  • Jean Baderschneider

    Non-Executive Director

    • Tenure: 4.8yrs
    • Compensation: US$177.10k
  • Sharon Warburton (49yo)

    Co-Deputy Chair

    • Tenure: 2.3yrs
    • Compensation: US$379.50k
  • Jennifer Morris

    Non-Executive Director

    • Tenure: 2.9yrs
    • Compensation: US$215.05k
  • Ya Zhang

    Non-Executive Director

    • Tenure: 0.08yrs
  • Zhiqiang Cao

    Director

    • Tenure: 1.8yrs
    • Compensation: US$177.10k

Company Information

Fortescue Metals Group Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fortescue Metals Group Limited
  • Ticker: FMG
  • Exchange: ASX
  • Founded: 2003
  • Industry: Steel
  • Sector: Materials
  • Market Cap: AU$26.158b
  • Shares outstanding: 3.08b
  • Website: https://www.fmgl.com.au

Number of Employees


Location

  • Fortescue Metals Group Limited
  • 87 Adelaide Terrace
  • Level 2
  • East Perth
  • Western Australia
  • 6004
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FSUM.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 1989
FVJDB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 1989
FMGASX (Australian Securities Exchange)YesOrdinary SharesAUAUDOct 1989
FMGCHIA (Chi-X Australia)YesOrdinary SharesAUAUDOct 1989
FSUG.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDFeb 2012

Biography

Fortescue Metals Group Limited engages in the exploration, development, production, processing, and sale of iron ore in Australia, China, and internationally. It also explores for copper and gold deposits. ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/17 10:32
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.