LSE:RIO

Stock Analysis Report

Executive Summary

Rio Tinto Group engages in finding, mining, and processing mineral resources worldwide.

Rewards

Trading at 33.6% below its fair value

Earnings grew by 36.1% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -9.9% per year for the next 3 years

Unstable dividend track record

Significant insider selling over the past 3 months



Snowflake Analysis

Outstanding track record with excellent balance sheet and pays a dividend.


Similar Companies

Glencore

LSE:GLEN

Share Price & News

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


Latest Share Price and Events

Stable Share Price: RIO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.4%

RIO

-0.8%

GB Metals and Mining

-0.4%

GB Market


1 Year Return

-5.6%

RIO

-0.4%

GB Metals and Mining

6.6%

GB Market

Return vs Industry: RIO underperformed the UK Metals and Mining industry which returned -0% over the past year.

Return vs Market: RIO underperformed the UK Market which returned 6.2% over the past year.


Shareholder returns

RIOIndustryMarket
7 Day-1.4%-0.8%-0.4%
30 Day-10.2%-5.6%-1.7%
90 Day2.6%8.0%5.4%
1 Year6.1%-5.6%8.2%-0.4%12.4%6.6%
3 Year46.0%16.5%33.8%11.9%18.5%3.4%
5 Year84.9%32.5%73.0%32.5%35.8%4.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Rio Tinto Group undervalued compared to its fair value and its price relative to the market?

33.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RIO (£42.02) is trading below our estimate of fair value (£63.24)

Significantly Below Fair Value: RIO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: RIO is good value based on its PE Ratio (6.8x) compared to the Metals and Mining industry average (9.7x).

PE vs Market: RIO is good value based on its PE Ratio (6.8x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: RIO is overvalued based on its PB Ratio (2.2x) compared to the GB Metals and Mining industry average (1.1x).


Next Steps

Future Growth

How is Rio Tinto Group forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

-9.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RIO's earnings are forecast to decline over the next 3 years (-9.9% per year).

Earnings vs Market: RIO's earnings are forecast to decline over the next 3 years (-9.9% per year).

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

Revenue vs Market: RIO's revenue is expected to decline over the next 3 years (-3.5% per year).

High Growth Revenue: RIO's revenue is forecast to decline over the next 3 years (-3.5% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RIO's Return on Equity is forecast to be low in 3 years time (17.1%).


Next Steps

Past Performance

How has Rio Tinto Group performed over the past 5 years?

32.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RIO has high quality earnings.

Growing Profit Margin: RIO's current net profit margins (32.4%) are higher than last year (24.2%).


Past Earnings Growth Analysis

Earnings Trend: RIO's earnings have grown significantly by 32.2% per year over the past 5 years.

Accelerating Growth: RIO's earnings growth over the past year (36.1%) exceeds its 5-year average (32.2% per year).

Earnings vs Industry: RIO earnings growth over the past year (36.1%) exceeded the Metals and Mining industry 7%.


Return on Equity

High ROE: RIO's Return on Equity (27.9%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Rio Tinto Group's financial position?


Financial Position Analysis

Short Term Liabilities: RIO's short term assets ($16.9B) exceed its short term liabilities ($11.1B).

Long Term Liabilities: RIO's short term assets ($16.9B) do not cover its long term liabilities ($31.4B).


Debt to Equity History and Analysis

Debt Level: RIO's debt to equity ratio (29.3%) is considered satisfactory.

Reducing Debt: RIO's debt to equity ratio has reduced from 45% to 29.3% over the past 5 years.

Debt Coverage: RIO's debt is well covered by operating cash flow (100.1%).

Interest Coverage: RIO's interest payments on its debt are well covered by EBIT (33.7x coverage).


Balance Sheet

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

Debt Coverage by Assets: RIO's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

What is Rio Tinto Group's current dividend yield, its reliability and sustainability?

5.82%

Current Dividend Yield


Dividend Yield vs Market

company5.8%marketbottom25%1.8%markettop25%5.1%industryaverage7.0%forecastin3Years6.0%

Current dividend yield vs market & industry

Notable Dividend: RIO's dividend (5.82%) is higher than the bottom 25% of dividend payers in the UK market (1.82%).

High Dividend: RIO's dividend (5.82%) is in the top 25% of dividend payers in the UK market (5.15%)


Stability and Growth of Payments

Stable Dividend: RIO's dividend payments have been volatile in the past 10 years.

Growing Dividend: RIO's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (40.5%), RIO's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RIO's dividends in 3 years are forecast to be covered by earnings (66.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.4yrs

Average management tenure


CEO

J-S Jacques (48yo)

3.6yrs

Tenure

US$6,139,000

Compensation

Mr. Jean-Sébastien Jacques, M.Sc., has been the Chief Executive Officer of Rio Tinto plc, Rio Tinto Limited and Rio Tinto Group since July 2, 2016. Mr. Jacques served as the Deputy Chief Executive at Rio T ...


CEO Compensation Analysis

Compensation vs Market: J-S's total compensation ($USD6.14M) is above average for companies of similar size in the UK market ($USD4.71M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Jean-Sébastien Jacques
CEO & Director3.6yrsUS$6.14m0.0063% $4.5m
Jakob Stausholm
CFO & Executive Director1.4yrsUS$1.97m0.00093% $660.4k
Vera Kirikova
Human Resources Group Executive3.1yrsUS$1.64m0.00024% $170.4k
Stephen McIntosh
Group Executive of Growth & Innovation1.1yrsUS$2.60m0.0012% $852.2k
Simon Trott
Chief Commercial Officer0yrsUS$2.52m0.00076% $539.7k
Alfredo Barrios
Chief Executive of Aluminium6.1yrsUS$3.24m0.0029% $2.0m
Chris Salisbury
Chief Executive of Iron Ore Group3.6yrsUS$2.52m0.0018% $1.3m
Arnaud Soirat
Chief Executive of Copper & Diamonds3.6yrsUS$2.64m0.0018% $1.3m
Bold Baatar
Chief Executive of Energy & Minerals3.2yrsUS$2.22m0.0022% $1.5m
Menno Gerard Sanderse
Head of Investor Relations0yrsno datano data

3.4yrs

Average Tenure

51yo

Average Age

Experienced Management: RIO's management team is considered experienced (3.4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jean-Sébastien Jacques
CEO & Director3.6yrsUS$6.14m0.0063% $4.5m
Jakob Stausholm
CFO & Executive Director1.4yrsUS$1.97m0.00093% $660.4k
Megan Clark
Independent Non-Executive Director5.3yrsUS$332.00kno data
William Samuel Laidlaw
Senior Independent Non-Executive Director0.8yrsUS$237.00k0.00046% $326.7k
Simon Thompson
Independent Chairman of the Board1.9yrsUS$852.00k0.00046% $326.7k
Simon Henry
Independent Non-Executive Director2.8yrsUS$224.00k0.000030% $21.3k
Michael L'Estrange
Independent Non-Executive Director5.4yrsUS$275.00kno data
Simon McKeon
Independent Non-Executive Director1.1yrsno datano data
David Constable
Independent Non-Executive Director3yrsUS$323.00k0.00016% $113.6k

2.8yrs

Average Tenure

60yo

Average Age

Experienced Board: RIO's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: RIO insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Rio Tinto Group's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Rio Tinto Group
  • Ticker: RIO
  • Exchange: LSE
  • Founded: 1873
  • Industry: Diversified Metals and Mining
  • Sector: Materials
  • Market Cap: UK£71.014b
  • Shares outstanding: 1.61b
  • Website: https://www.riotinto.com

Number of Employees


Location

  • Rio Tinto Group
  • 6 St James’s Square
  • London
  • Greater London
  • SW1Y 4AD
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RTPP.FOTCPK (Pink Sheets LLC)YesPLC Ordinary SharesUSUSDJan 1975
RIOLSE (London Stock Exchange)YesPLC Ordinary SharesGBGBPJan 1975
RIO1DB (Deutsche Boerse AG)YesPLC Ordinary SharesDEEURJan 1975
RIOPSWX (SIX Swiss Exchange)YesPLC Ordinary SharesCHCHFJan 1975
RIO1XTRA (XETRA Trading Platform)YesPLC Ordinary SharesDEEURJan 1975
RIOLBATS-CHIXE (BATS 'Chi-X Europe')YesPLC Ordinary SharesGBGBPJan 1975
RIONYSE (New York Stock Exchange)SPONSORED ADRUSUSDJun 1990
0KWZLSE (London Stock Exchange)SPONSORED ADRGBUSDJun 1990
RIO NBMV (Bolsa Mexicana de Valores)SPONSORED ADRMXMXNJun 1990
RIOADB (Deutsche Boerse AG)SPONSORED ADRDEEURJun 1990
RTNT.FOTCPK (Pink Sheets LLC)LTD Ordinary SharesUSUSDDec 1995
CRA1DB (Deutsche Boerse AG)LTD Ordinary SharesDEEURDec 1995
RIOASX (Australian Securities Exchange)LTD Ordinary SharesAUAUDDec 1995
RIOSWX (SIX Swiss Exchange)LTD Ordinary SharesCHCHFDec 1995
RIOCHIA (Chi-X Australia)LTD Ordinary SharesAUAUDDec 1995
RIO1EURTSX (The Toronto Stock Exchange)LTD Ordinary SharesCAEURDec 1995

Biography

Rio Tinto Group engages in finding, mining, and processing mineral resources worldwide. The company offers aluminium, silver, molybdenum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. It is also involved in the alumina production; primary aluminium smelting; bauxite mining; alumina refining; and ilmenite mining, as well as provision of gypsum. Rio Tinto Group was incorporated in 1873 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 21:06
End of Day Share Price2020/02/19 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.