RIO TINTO PLC-SPON ADR (RIO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:RIO - US7672041008 - ADR
92.89 USD
+2.42 (+2.67%)
92.91 USD
+0.02 (+0.02%)
We assign a fundamental rating of 5 out of 10 to RIO. RIO was compared to 154 industry peers in the Metals & Mining industry. RIO has an excellent profitability rating, but there are some minor concerns on its financial health. RIO is cheap, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
- In the past year RIO was profitable.
- In the past year RIO had a positive cash flow from operations.
- Each year in the past 5 years RIO has been profitable.
- Each year in the past 5 years RIO had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 8.50%, RIO belongs to the top of the industry, outperforming 84.42% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 17.65%, RIO belongs to the top of the industry, outperforming 90.26% of the companies in the same industry.
- RIO has a Return On Invested Capital of 9.47%. This is in the better half of the industry: RIO outperforms 77.92% of its industry peers.
- RIO had an Average Return On Invested Capital over the past 3 years of 14.66%. This is above the industry average of 10.32%.
- The 3 year average ROIC (14.66%) for RIO is well above the current ROIC(9.47%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.5% | ||
| ROE | 17.65% | ||
| ROIC | 9.47% |
ROA(3y)11.25%
ROA(5y)12.86%
ROE(3y)21.27%
ROE(5y)25.13%
ROIC(3y)14.66%
ROIC(5y)17.06%
1.3 Margins
- RIO's Profit Margin of 19.12% is amongst the best of the industry. RIO outperforms 82.47% of its industry peers.
- In the last couple of years the Profit Margin of RIO has grown nicely.
- With a decent Operating Margin value of 25.78%, RIO is doing good in the industry, outperforming 75.32% of the companies in the same industry.
- RIO's Operating Margin has declined in the last couple of years.
- With an excellent Gross Margin value of 47.59%, RIO belongs to the best of the industry, outperforming 83.12% of the companies in the same industry.
- RIO's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.78% | ||
| PM (TTM) | 19.12% | ||
| GM | 47.59% |
OM growth 3Y-15.69%
OM growth 5Y-5.08%
PM growth 3Y-13.49%
PM growth 5Y3.02%
GM growth 3Y-9.8%
GM growth 5Y-2.74%
2. Health
2.1 Basic Checks
- RIO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- RIO has about the same amout of shares outstanding than it did 1 year ago.
- The number of shares outstanding for RIO remains at a similar level compared to 5 years ago.
- The debt/assets ratio for RIO has been reduced compared to a year ago.
2.2 Solvency
- RIO has an Altman-Z score of 2.89. This is not the best score and indicates that RIO is in the grey zone with still only limited risk for bankruptcy at the moment.
- RIO has a Altman-Z score of 2.89. This is comparable to the rest of the industry: RIO outperforms 40.91% of its industry peers.
- The Debt to FCF ratio of RIO is 4.61, which is a neutral value as it means it would take RIO, 4.61 years of fcf income to pay off all of its debts.
- RIO has a Debt to FCF ratio of 4.61. This is in the better half of the industry: RIO outperforms 70.78% of its industry peers.
- A Debt/Equity ratio of 0.39 indicates that RIO is not too dependend on debt financing.
- RIO's Debt to Equity ratio of 0.39 is on the low side compared to the rest of the industry. RIO is outperformed by 67.53% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 4.61 | ||
| Altman-Z | 2.89 |
ROIC/WACC0.91
WACC10.42%
2.3 Liquidity
- RIO has a Current Ratio of 1.53. This is a normal value and indicates that RIO is financially healthy and should not expect problems in meeting its short term obligations.
- The Current ratio of RIO (1.53) is worse than 71.43% of its industry peers.
- RIO has a Quick Ratio of 1.03. This is a normal value and indicates that RIO is financially healthy and should not expect problems in meeting its short term obligations.
- With a Quick ratio value of 1.03, RIO is not doing good in the industry: 67.53% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.53 | ||
| Quick Ratio | 1.03 |
3. Growth
3.1 Past
- The earnings per share for RIO have decreased strongly by -15.75% in the last year.
- Measured over the past 5 years, RIO shows a small growth in Earnings Per Share. The EPS has been growing by 1.06% on average per year.
- Looking at the last year, RIO shows a decrease in Revenue. The Revenue has decreased by -0.83% in the last year.
- RIO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.45% yearly.
EPS 1Y (TTM)-15.75%
EPS 3Y-20.07%
EPS 5Y1.06%
EPS Q2Q%-16.45%
Revenue 1Y (TTM)-0.83%
Revenue growth 3Y-5.46%
Revenue growth 5Y4.45%
Sales Q2Q%0.26%
3.2 Future
- RIO is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -3.80% yearly.
- RIO is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -3.10% yearly.
EPS Next Y-0.82%
EPS Next 2Y7.54%
EPS Next 3Y4.69%
EPS Next 5Y-3.8%
Revenue Next Year3.34%
Revenue Next 2Y3.43%
Revenue Next 3Y3.32%
Revenue Next 5Y-3.1%
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- RIO is valuated correctly with a Price/Earnings ratio of 15.06.
- Based on the Price/Earnings ratio, RIO is valued cheaper than 96.75% of the companies in the same industry.
- RIO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.25.
- The Price/Forward Earnings ratio is 11.89, which indicates a very decent valuation of RIO.
- Based on the Price/Forward Earnings ratio, RIO is valued cheaper than 85.06% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, RIO is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.06 | ||
| Fwd PE | 11.89 |
4.2 Price Multiples
- 88.96% of the companies in the same industry are more expensive than RIO, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, RIO is valued cheaply inside the industry as 85.06% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.42 | ||
| EV/EBITDA | 8.57 |
4.3 Compensation for Growth
- The excellent profitability rating of RIO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)14.26
EPS Next 2Y7.54%
EPS Next 3Y4.69%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 4.39%, RIO is a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 1.02, RIO pays a better dividend. On top of this RIO pays more dividend than 95.45% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, RIO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.39% |
5.2 History
- The dividend of RIO decreases each year by -7.29%.
- RIO has been paying a dividend for at least 10 years, so it has a reliable track record.
- RIO has decreased its dividend recently.
Dividend Growth(5Y)-7.29%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
- 64.89% of the earnings are spent on dividend by RIO. This is not a sustainable payout ratio.
- The Dividend Rate of RIO has been decling, while earnings will also be declining. This means the current dividend is most likely not sustainable.
DP64.89%
EPS Next 2Y7.54%
EPS Next 3Y4.69%
RIO TINTO PLC-SPON ADR / RIO FAQ
What is the ChartMill fundamental rating of RIO TINTO PLC-SPON ADR (RIO) stock?
ChartMill assigns a fundamental rating of 5 / 10 to RIO.
What is the valuation status for RIO stock?
ChartMill assigns a valuation rating of 7 / 10 to RIO TINTO PLC-SPON ADR (RIO). This can be considered as Undervalued.
What is the profitability of RIO stock?
RIO TINTO PLC-SPON ADR (RIO) has a profitability rating of 8 / 10.
What are the PE and PB ratios of RIO TINTO PLC-SPON ADR (RIO) stock?
The Price/Earnings (PE) ratio for RIO TINTO PLC-SPON ADR (RIO) is 15.06 and the Price/Book (PB) ratio is 2.59.
What is the expected EPS growth for RIO TINTO PLC-SPON ADR (RIO) stock?
The Earnings per Share (EPS) of RIO TINTO PLC-SPON ADR (RIO) is expected to decline by -0.82% in the next year.