Rio Tinto (RIO) AI Stock Analysis

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Rio Tinto

(NYSE:RIO)

74Outperform

Rio Tinto's overall stock score is bolstered by its strong financial performance, attractive valuation, and optimistic earnings call guidance. Key strengths include robust profitability margins and strategic growth in aluminum and copper. However, challenges in revenue growth, cash flow conversion, and external factors affecting iron ore temper the score slightly. The company's attractive dividend yield and low P/E ratio enhance its investment appeal.

Rio Tinto (RIO) vs. S&P 500 (SPY)

Market Cap

$94.84B

Dividend Yield7.03%

Average Volume (3M)3.64M

Price to Earnings (P/E)7.7

Beta (1Y)0.77

Revenue Growth-0.81%

EPS Growth14.59%

CountryUS

Employees60,000

SectorBasic Materials

Sector Strength58

IndustryIndustrial Materials

Share Statistics

EPS (TTM)7.08

Shares Outstanding1,253,972,400

10 Day Avg. Volume4,835,391

30 Day Avg. Volume3,636,330

Financial Highlights & Ratios

PEG Ratio0.53

Price to Book (P/B)N/A

Price to Sales (P/S)1.45

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$79.00

Price Target Upside38.94% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Rio Tinto Business Overview & Revenue Model

Company DescriptionRio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company operates through Iron Ore, Aluminium, Copper, and Minerals Segments. The Iron Ore segment engages in the iron ore mining, and salt and gypsum production in Western Australia. The Aluminum segment is involved in bauxite mining; alumina refining; and aluminium smelting. The Copper segment engages in mining and refining of copper, gold, silver, molybdenum, and other by-products and exploration activities. The Minerals segment is involved in mining and processing of borates, titanium dioxide feedstock, and iron concentrate and pellets; diamond mining, sorting, and marketing; and development projects for battery materials, such as lithium. It also owns and operates open pit and underground mines; and refineries, smelters, processing plants and power, and shipping facilities. Rio Tinto Group was founded in 1873 and is headquartered in London, the United Kingdom.

How the Company Makes MoneyRio Tinto makes money primarily through the extraction, processing, and sale of minerals and metals. The company's revenue model is centered around several key products, including iron ore, aluminum, and copper, which are among the most significant contributors to its earnings. Iron ore, in particular, is a major revenue driver due to its use in steel production, with Rio Tinto benefiting from its extensive mining operations in the Pilbara region of Western Australia. The company also generates revenue from aluminum production, supported by its vertically integrated business model encompassing bauxite mining, alumina refining, and aluminum smelting. Copper is another vital revenue stream, with operations in key mining regions such as Chile and the United States. Additionally, Rio Tinto's strategic partnerships and joint ventures, such as those with Chinese companies, enhance its market presence and contribute to its financial performance. The company is also focused on sustainable and responsible mining practices, aiming to create value for its shareholders while adhering to environmental and social governance standards.

Rio Tinto Financial Statement Overview

Summary

Rio Tinto's financials indicate a stable outlook with strong profitability margins and a robust balance sheet. The company faces challenges in revenue growth and cash flow conversion, yet its operational efficiency and capital structure remain commendable.

Income Statement

Positive

Rio Tinto has shown a mixed performance in its recent income statements. The Gross Profit Margin improved in 2024, reaching 56.43% from 32.01% in 2023, indicating better cost management. However, the Net Profit Margin saw a slight decline from 18.61% in 2023 to 21.53% in 2024. The Revenue Growth Rate was negative at -0.71% from 2023 to 2024, showing a slight contraction in sales. Despite these challenges, EBIT and EBITDA margins remain strong at 29.17% and 43.16% respectively, showcasing operational efficiency.

Balance Sheet

Very Positive

Rio Tinto maintains a solid balance sheet with a healthy Equity Ratio of 53.73% in 2024, reflecting strong capitalization. The Debt-to-Equity Ratio improved to 0.25 from 0.26, indicating effective management of liabilities. Return on Equity is robust at 20.91%, a slight increase from 18.43% in 2023, highlighting the company's ability to generate returns for its shareholders.

Cash Flow

Positive

The cash flow position of Rio Tinto shows some areas of concern. Free Cash Flow decreased by 25.95% from 2023 to 2024, but operating cash flow remains stable. The Operating Cash Flow to Net Income Ratio is strong at 1.35, indicating good cash generation relative to net profits. However, the Free Cash Flow to Net Income Ratio fell to 0.52, suggesting reduced cash conversion efficiency.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
53.66B	54.04B	55.55B	63.49B	44.61B
	Gross Profit
30.28B	17.30B	34.27B	44.93B	29.13B
	EBIT
15.65B	14.82B	19.93B	29.82B	16.83B
	EBITDA
22.31B	20.38B	24.76B	35.08B	19.66B
	Net Income Common Stockholders
11.55B	10.06B	12.39B	21.11B	9.77B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.20B	10.79B	8.94B	15.35B	13.23B
	Total Assets
102.79B	103.55B	96.74B	102.90B	97.39B
	Total Debt
13.86B	14.35B	12.27B	13.53B	14.02B
	Net Debt
7.03B	4.68B	5.50B	724.00M	3.63B
	Total Liabilities
44.82B	47.21B	44.47B	46.31B	45.49B
	Stockholders Equity
55.25B	54.59B	50.17B	51.43B	47.05B
Cash Flow		Free Cash Flow
5.98B	8.07B	9.38B	17.96B	9.69B
	Operating Cash Flow
15.60B	15.16B	16.13B	25.34B	15.88B
	Investing Cash Flow
-9.59B	-6.96B	-6.71B	-7.16B	-6.56B
	Financing Cash Flow
-7.09B	-5.28B	-15.47B	-15.86B	-7.13B

Rio Tinto Technical Analysis

Technical Analysis Sentiment

Negative

Last Price56.86

Price Trends

50DMA

60.15

Negative

100DMA

59.55

Negative

200DMA

60.75

Negative

Market Momentum

MACD

0.16

Positive

RSI

42.74

Neutral

STOCH

21.52

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RIO, the sentiment is Negative. The current price of 56.86 is below the 20-day moving average (MA) of 59.76, below the 50-day MA of 60.15, and below the 200-day MA of 60.75, indicating a bearish trend. The MACD of 0.16 indicates Positive momentum. The RSI at 42.74 is Neutral, neither overbought nor oversold. The STOCH value of 21.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RIO.

Rio Tinto Risk Analysis

Rio Tinto disclosed 5 risk factors in its most recent earnings report. Rio Tinto reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Rio Tinto Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VALE	74 Outperform	$38.43B	6.25	16.72%	8.10%	-8.71%	-22.75%
RIO	74 Outperform	$94.84B	7.71	20.93%	7.03%	-0.81%	14.59%
BHP	70 Outperform	$114.84B	9.71	26.13%	5.41%	-3.15%	54.08%
MTRN	63 Neutral	$1.60B	272.42	0.67%	0.69%	1.19%	-93.81%
MP	61 Neutral	$3.85B	―	-5.41%	―	-19.57%	-392.96%
NEXA	51 Neutral	$793.31M	―	-20.22%	―	6.28%	29.57%
Sector *	47 Neutral	$2.49B	-2.97	-22.82%	3.51%	4.13%	-28.53%

* Basic Materials Sector Average

Performance Comparison

RIO

Rio Tinto

56.86

-5.77

-9.21%

BHP

BHP Group

45.25

-11.08

-19.67%

MTRN

Materion

78.15

-46.28

-37.19%

VALE

Vale SA

9.22

-1.91

-17.16%

NEXA

Nexa Resources SA

5.99

-1.13

-15.87%

MP Materials

22.68

6.18

37.45%

Rio Tinto Earnings Call Summary

Earnings Call Date: Feb 19, 2025 | % Change Since: -8.20% | Next Earnings Date: Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted steady financial performance and growth prospects, particularly in aluminum and copper, alongside impressive shareholder returns and decarbonization progress. However, challenges remain with weather impacts on iron ore production and pricing, as well as operational issues in certain segments. The sentiment is cautiously optimistic with a focus on strategic growth and resilience.

Highlights

Consistent Shareholder Returns

For the ninth consecutive year, the company has paid ordinary dividends at the top end of the range, equating to $6.5 billion, maintaining a 60% payout ratio.

Resilient Financial Performance

Operating cash flow increased by 3% with a 67% EBITDA cash conversion rate, even with an 11% drop in iron ore prices.

Positive Growth Outlook

Copper equivalent production increased by 1% in 2024, with guidance for another 4% growth led by the ramp-up of Oyu Tolgoi, excluding Arcadium Lithium acquisition.

Strong Performance in Aluminum and Copper

Aluminum and copper divisions showed rising contributions, with aluminum performance particularly strong, leading to a 61% increase in product group EBITDA.

Significant Progress in Decarbonization

Emissions reduced by 14% from 2018 to 2024, with significant project approvals advancing towards a 50% reduction target by 2030.

Lowlights

Impact of Weather on Iron Ore

Cyclones and unusual high rainfall in the Pilbara impacted production, with first quarter production affected, but full-year shipment guidance remains unchanged.

Iron Ore Pricing Challenges

Despite strong realized pricing, the iron ore segment faced challenges due to an 11% price drop, impacting overall EBITDA.

Operational Stability Issues

IOC (Iron Ore Company of Canada) has not yet achieved the operational stability the company is striving for.

TiO2 Market Weakness

TiO2 volumes reflected weak Western market conditions for pigment, affecting the Minerals segment performance.

Company Guidance

In the call, guidance for 2024 highlighted several key metrics and strategic achievements. Copper equivalent production grew by 1% in 2024, with a mid-range guidance predicting a 4% increase this year, driven by the Oyu Tolgoi ramp-up. The company anticipates a decade of 3% compound annual production growth, focusing on strategic investments in copper, aluminum, and lithium. Underlying EBITDA was slightly down by 2% to $23.3 billion, despite an 11% drop in iron ore prices, offset by increased contributions from aluminum and copper. Operating cash flow grew by 3%, with an EBITDA cash conversion rate rising to 67%. Capital investment reached $9.5 billion, ending the year with net debt of $5.5 billion. The company maintained a 60% ordinary dividend payout, equating to $6.5 billion. Moreover, the business achieved a record emission reduction, cutting emissions by 14% from 2018 to 2024, targeting a 50% reduction by 2030. Overall, the guidance reflects Rio Tinto's focus on operational improvements, strategic growth, and consistent shareholder returns.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.