Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. It also owns and operates open pit and underground mines, mills, refineries, smelters, power stations, and research and service facilities. This week, I fundamentally analyze Rio Tinto’s stock. I review Rio Tinto’s operating segments, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account Rio Tinto’s 2020 free cash flow of $9,686 million figure, a 6% growth rate of FCF (growth for the next 10 years), 10% discount rate, 2.125% long term growth rate (growth from 10 year mark in the future to perpetuity), 1,617 million shares outstanding, and $12,302 million of long term debt, the DCF analysis yields us an intrinsic value of $93.21 per share.
Timestamp
0:00 Introduction
0:35 Business Overview
2:49 Key Ratios Analysis
13:38 Discounted Cash Flow Analysis / Intrinsic Value
16:27 Conclusion
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References:
Rio Tinto’s Website: here.
Morningstar Key Ratios Link: here.
Useful Resources here.
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