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Fortescue Ltd FMG

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Stock XASX Rating as of
A$22.41 −0.21 (0.93%)
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Company Report

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Commodity Price Update Q3 2024: Value in Mineral Sands, Gold, and Thermal Coal

Jon Mills

Base metals prices surged earlier in the June quarter of 2024 before partially reversing due to concerns over China’s economy. Iron ore prices are broadly stable despite China's struggling property market and weak infrastructure spending, leading to questions over China's steel demand. After updating our commodity price assumptions, no-moat Iluka is the cheapest miner we cover, trading 31% below its unchanged fair value estimate of AUD 9.50.

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Price vs Fair Value

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FMG is trading within a range we consider fairly valued.
Price
A$22.41
Fair Value
A$16.30
Uncertainty
High
1-Star Price
A$89.87
5-Star Price
A$3.14
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Fortescue provides strong leverage to the Chinese economy. If growth in steel consumption remains strong, it's also likely iron ore prices and volumes will, too.

Bears

We think that ultimately Chinese fixed-asset investment will slow, and future iron ore volume growth and prices are likely to be much less favorable.

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Trading Information

Previous Close Price
A$22.62
Day Range
A$22.30–22.61
52-Week Range
A$19.28–29.95
Bid/Ask
A$22.38 / A$22.45
Market Cap
A$69.00 Bil
Volume/Avg
3.7 Mil / 6.4 Mil

Key Statistics

Price/Earnings (Normalized)
6.93
Price/Sales
2.48
Dividend Yield (Trailing)
9.28%
Dividend Yield (Forward)
9.64%
Total Yield
9.59%

Company Profile

Fortescue is an Australia-based iron ore miner. It has grown from obscurity start of 2008 to become the world's fourth-largest producer. Growth was fueled by debt, now repaid. Expansion from 55 million metric tons in fiscal 2012 to about 190 million metric tons in 2023 means Fortescue supplies nearly 10% of global seaborne iron ore. Further expansion above 200 million metric tons is likely once it completes construction of its 22 million metric tons Iron Bridge magnetite mine. However, with longer-term demand likely to decline as China's economy matures, we expect Fortescue's future margins to be below historical averages. More recently, Fortescue diversified into green energy, with ambitions to become a major supplier of green hydrogen and green ammonia. Its efforts are early stage.
Sector
Basic Materials
Industry
Other Industrial Metals & Mining
Stock Style Box
Large Value
Total Number of Employees
3,898
Website
https://www.fortescue.com

Competitors

Valuation

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Metric
FMG
RIO
BHP
Price/Earnings (Normalized)
 6.9311.3211.19
Price/Book Value
 2.432.493.64
Price/Sales
 2.482.462.73
Price/Cash Flow
 5.328.047.08
Price/Earnings
FMG
RIO
BHP

Financial Strength

Metric
FMG
RIO
BHP
Quick Ratio
 2.261.041.08
Current Ratio
 2.841.691.57
Interest Coverage
 24.668.047.59
Quick Ratio
FMG
RIO
BHP

Profitability

Metric
FMG
RIO
BHP
Return on Assets (Normalized)
 22.58%11.84%13.90%
Return on Equity (Normalized)
 35.67%22.48%31.67%
Return on Invested Capital (Normalized)
 27.74%19.38%21.70%
Return on Assets
FMG
RIO
BHP
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