Rio Tinto Plc (NYSE: RIO) announced its earnings and revenue report on Wednesday, February 23, 2022, in which it said that it reported a profit and almost doubled its full-year shareholders' payout.
What to look for: The company is the latest resources firm that has reported a surge in earnings attributed to the increase in commodity prices. With the global economic recovery attributed to industrial production, there was a significant price increase in commodities. In addition, commodity prices increased over the past year because of monetary and fiscal policies geared to support economic growth. For example, the iron ore price, the main component in steel, has been strong this past year, surging to all-time highs.
Earnings: Stockearning’s Estimated EPS was $1.321, representing a YoY change of 72%. Profit after tax attributable to owners of the company was $21.38 billion, increasing from $12.45 billion a year before, which reflects the recent surge in the price of iron ore, accounting for most of the company's profits. Analysts had predicted had predicted $21.63 billion in underlying earnings.
Revenue: The company reported consolidated revenue of $63.495 billion, representing a 42% YoY increase. Rio Tinto also declared a final dividend of $4.17 per share and a special dividend of $0.62 per share. The company's payout was $10.4 per share for the whole year.
Stock movement: RIO shares have lost 4.5% since the company released its last earnings release. Interestingly, the company’s shares have been UP once in the last two quarters. So, the historical price reaction suggests a 50% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-2%, while the predicted volatility on the seventh day is +/-5%.
What analysts are saying: JPMorgan analyst Lyndon Fagan raised his price target on the stock from £4,840 to £5,100 and maintained a Hold rating in the shares. Also, Morgan Stanley's Alaina Gabriel raised Rio Tinto’s price target from £5,220 to £6,220 and maintained a Buy rating in the stock. Jefferies analyst Christopher LaFemina raised his price target ion Rio Tinto from $65 to $70 but maintained a hold rating on the shares. He's put his new, higher iron ore price expectations through his algorithms, resulting in updated estimations. Still, he's keeping his Hold ratings on the iron ore mining stocks in his coverage since he prefers copper and other base metals producers to iron ore miners.
Barclays analyst Amos Fletcher lowered his price target on RIO from £4,500 to £4,400 and maintained a Hold rating in the stock with Liberum’s Ben Davis downgrading the stock from Hold to Sell.
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