Strong 2014 Predictions for Rio Tinto

Morningstar equity analysts are raising this year's full-year earnings forecast by 35%, chiefly due to impressive iron ore cost reductions

Mark Taylor 14 August, 2014 | 11:56AM
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Rio Tinto's (RIO) strong first half is unequivocally positive for its full-year 2014. We're raising this year's full-year earnings forecast by 35%, chiefly due to impressive iron ore cost reductions. Our 2015 earnings forecast is marginally higher, though still down on 2014 in anticipation of weaker commodity, primarily iron ore, prices.

Our fair value estimate is unchanged at £41.65 per share. We don't consider one half-year's earnings sufficient to meaningfully alter our overall long-term outlook. At £34, the shares remain undervalued, a benefit in a company of Rio's pedigree. Rio probably has the best iron ore business in the world. We remain upbeat on the outlook for capital and operating cost savings.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Rio Tinto PLC4,830.50 GBX-0.57Rating

About Author

Mark Taylor  is an equity analyst at Morningstar.

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