November 7, 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 November 07, 2024 in the market index Lithium because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 32 (32% performer), Obermatt assesses an overall hold recommendation for Rio Tinto on November 07, 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 | November 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 25 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 60 |
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| SENTIMENT | ||||||||
| SENTIMENT | 39 |
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| 360° VIEW | ||||||||
| 360° VIEW | 32 |
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ANALYSIS: With an Obermatt 360° View of 32 (better than 32% 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 half of the metrics below and half above average for Rio Tinto. The consolidated Growth Rank has a good rank of 53, 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 53% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 60 which means that the company has a financing structure that is safer than 60% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 25 which means that the share price of Rio Tinto is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 75% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 39, which means that professional investors are more pessimistic about the stock than for 61% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 32, Rio Tinto is worse than 68% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 53), and the company is safely financed (Safety Rank of 60). However, professional market sentiment is low(Sentiment Rank of 39). The negative market view on Rio Tinto may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because 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 value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Rio Tinto only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 39 (better than 39% compared with alternatives), overall professional sentiment and engagement for the stock Rio Tinto is below industry 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 7, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 59, which means that professional investors hold more stock in this company than in 59% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 68, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 68% 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 39 (less encouraging than 61% compared with investment alternatives), Rio Tinto has a reputation among professional investors that is below 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 25 (worse than 75% 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 57 which means that the stock price compared with what market professionals expect for future profits is lower than for 57% 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 20, which means that the stock price is lower as regards to invested capital than for 20% of comparable investments. On the other hand, Price-to-Sales is less favorable than 92% of alternatives (only 8% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 9% 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 25, 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 53 (better than 53% 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 half of the indicators below and half above average for Rio Tinto. Capital Growth has a rank of 79, which means that currently professionals expect the company to grow its invested capital more than 47% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 53 (above 53% of alternative investments). But Sales Growth has only a rank of 12, which means that, currently, professionals expect the company to grow less than 88% of its competitors, and Profit Growth is also low at a rank of 47. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Rio Tinto, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Rio Tinto Debt Financing Safety above-average
| SAFETY METRICS | November 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 68 |
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| REFINANCING | ||||||||
| REFINANCING | 19 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 82 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 60 |
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ANALYSIS: With an Obermatt Safety Rank of 60 (better than 60% 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 68, meaning the company has a below-average debt-to-equity ratio. It has less debt than 68% of its competitors. Liquidity is also good at a rank of 82, meaning the company generates more profit to service its debt than 82% 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 19, 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 81% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 60 (better than 60% 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 | November 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 25 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 82 |
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| COMBINED | ||||||||
| COMBINED | 36 |
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ANALYSIS: With an Obermatt Combined Rank of 36 (worse than 64% 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 25 (worse than 75% of alternatives). But they show above-average growth (Growth Rank of 53) and are safely financed (Safety Rank of 60, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 36, 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 25), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 53). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 60) 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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