March 28, 2024
Top 10 Stock Rio Tinto Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Rio Tinto – Top 10 Stock in Lithium Mining and Production
Rio Tinto is listed as a top 10 stock on March 28, 2024 in the market index Lithium because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 48 (48% performer), Obermatt assesses an overall hold recommendation for Rio Tinto on March 28, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Diversified Metals & Mining |
| Index | ASX 100, ASX 200, ASX 300, ASX 50, FTSE All Shares, FTSE 100, FTSE 350, Copper, Dividends Europe, Human Rights, Iron, Lithium, Low Waste, Silver, Water Efficiency |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Rio Tinto Hold
| 360 METRICS | March 28, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 27 |
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| GROWTH | ||||||||
| GROWTH | 56 |
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| SAFETY | ||||||||
| SAFETY | 58 |
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| SENTIMENT | ||||||||
| SENTIMENT | 50 |
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| 360° VIEW | ||||||||
| 360° VIEW | 48 |
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ANALYSIS: With an Obermatt 360° View of 48 (better than 48% compared with alternatives), overall professional sentiment and financial characteristics for the stock Rio Tinto are below the industry average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Rio Tinto. The consolidated Growth Rank has a good rank of 56, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 56% of competitors in the same industry. The consolidated Safety Rank at 58 means that the company has a financing structure that is safer than 58% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 50, which means that professional investors are more optimistic about the stock than for 50% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 27, meaning that the share price of Rio Tinto is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 73% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 48, Rio Tinto is worse than 52% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 56), a safe financing structure (Safety Rank of 58), and positive professional market sentiment (Sentiment Rank of 50), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Rio Tinto compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (56% better than peers). The value rank could be the reverse reflection of that (44%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Rio Tinto positive
ANALYSIS: With an Obermatt Sentiment Rank of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Rio Tinto is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Rio Tinto. Analyst Opinions are at a rank of 45 (worse than 55% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 37, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 54, which means that professional investors hold more stock in this company than in 54% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 63, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 63% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Rio Tinto and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 50 (more positive than 50% compared with investment alternatives), Rio Tinto has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Rio Tinto Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 27 (worse than 73% compared with alternatives), Rio Tinto shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Rio Tinto. Price-to-Profit (also referred to as price-earnings, P/E) is 64 which means that the stock price compared with what market professionals expect for future profits is lower than for 64% of comparable companies, indicating a good value concerning Rio Tinto's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 17, which means that the stock price is lower as regards to invested capital than for 17% of comparable investments. On the other hand, Price-to-Sales is less favorable than 91% of alternatives (only 9% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 2% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 27, is a hold recommendation based on Rio Tinto's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Rio Tinto Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 56 (better than 56% compared with alternatives), Rio Tinto shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Rio Tinto. Profit Growth has a rank of 70 which means that currently professionals expect the company to grow its profits more than 70% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 55, and Stock Returns has a rank of 69 which means that the stock returns have recently been above 69% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 14 (86% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 56, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Rio Tinto Debt Financing Safety above-average
| SAFETY METRICS | March 28, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 64 |
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| REFINANCING | ||||||||
| REFINANCING | 17 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 74 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 58 |
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ANALYSIS: With an Obermatt Safety Rank of 58 (better than 58% compared with alternatives), the company Rio Tinto has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Rio Tinto is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Rio Tinto. Leverage is at a rank of 64, meaning the company has a below-average debt-to-equity ratio. It has less debt than 64% of its competitors. Liquidity is also good at a rank of 74, meaning the company generates more profit to service its debt than 74% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 17, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 83% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 58 (better than 58% compared with alternatives), Rio Tinto has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Rio Tinto. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Rio Tinto Below-Average Financial Performance
| COMBINED PERFORMANCE | March 28, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 27 |
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| GROWTH | ||||||||
| GROWTH | 56 |
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| SAFETY | ||||||||
| SAFETY | 74 |
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| COMBINED | ||||||||
| COMBINED | 46 |
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ANALYSIS: With an Obermatt Combined Rank of 46 (worse than 54% compared with investment alternatives), Rio Tinto (Diversified Metals & Mining, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Rio Tinto are low in value (priced high) with a consolidated Value Rank of 27 (worse than 73% of alternatives). But they show above-average growth (Growth Rank of 56) and are safely financed (Safety Rank of 58, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 46, is a hold recommendation based on Rio Tinto's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Rio Tinto exhibits low value (Obermatt Value Rank of 27), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 56). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 58) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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