Dividend Gets a Kick with Solid Rio Tinto Result, Fair Value Estimate Unchanged
We maintain our AUD 39 per share fair value estimate for no-moat Rio Tinto following solid full-year results. Despite this near-term strength, we still think Rio Tinto is overvalued. Iron ore is particularly exposed to investment and we expect the benefits of the recent stimulus in China to wane, dragging down commodity prices and Rio Tinto’s return on invested capital (to mid-single digits by 2020 from roughly cost-of-capital returns this year). That said, we still view our fair value estimate ...Rio Tinto is a mining group based in the United Kingdom and Australia. Co. is engaged in the business of finding, mining and processing mineral resources. Co.'s major products are iron ore, aluminium, copper, diamonds, coal, uranium, gold and industrial minerals (borax, titanium dioxide and salt). Co.'s activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and Africa. Co.'s operations comprise four principal product groups - Iron Ore, Aluminium, Copper and Diamonds, and Energy & Minerals.
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