May 25, 2023
Top 10 Stock Rio Tinto Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Rio Tinto – Top 10 Stock in Copper Mining and Production
Rio Tinto is listed as a top 10 stock on May 25, 2023 in the market index Copper because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 25 (25% performer), Obermatt assesses an overall hold recommendation for Rio Tinto on May 25, 2023.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Diversified Metals & Mining |
| Index | ASX 100, ASX 200, ASX 300, ASX 50, FTSE All Shares, FTSE 100, FTSE 350, Copper, Dividends Europe, Human Rights, Iron, Lithium, Low Waste, Silver, Water Efficiency |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Rio Tinto Hold
| 360 METRICS | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 19 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 49 |
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| SENTIMENT | ||||||||
| SENTIMENT | 39 |
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| 360° VIEW | ||||||||
| 360° VIEW | 25 |
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ANALYSIS: With an Obermatt 360° View of 25 (better than 25% compared with alternatives), overall professional sentiment and engagement for the stock Rio Tinto are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Rio Tinto. The consolidated Growth Rank has a good rank of 63, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 63% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 19 means that the share price of Rio Tinto is on the high side compared with its peer regarding revenues, profits, and invested capital. The stock price is higher than 81% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 49, which means that the company has a riskier financing structure than 51% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 39, indicating professional investors are more pessimistic about the stock than for 61% of alternative investment opportunities. ...read more
RECOMMENDATION: With a 360° View of 25, Rio Tinto is worse than 75% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 63), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 39), the company is rather risky when it comes to financing (Safety Rank of 49). The negative market view on Rio Tinto may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Rio Tinto compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Rio Tinto only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 39 (better than 39% compared with alternatives), overall professional sentiment and engagement for the stock Rio Tinto is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Rio Tinto. Analyst Opinions are at a rank of 15 (worse than 85% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 52, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Rio Tinto. More encouragingly, the Professional Investors rank is 97, which means that professional investors hold more stock in this company than in 97% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 36, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 64% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 39 (less encouraging than 61% compared with investment alternatives), Rio Tinto has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for Rio Tinto. While analysts and the news channels are negative, there is a change in what stock research analysts think. Above-average institutional investors in this company support them. While the sentiment signals remain mixed with analysts and news channels pessimistic, some analysts are optimistic, which is an encouraging sign for investing in this stock. ...read more
Value Strategy: Rio Tinto Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 19 (worse than 81% compared with alternatives), Rio Tinto shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Rio Tinto. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 91% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 9 which means that the stock price compared with what market professionals expect for future profits is higher than 91% of comparable companies, indicating a low value concerning Rio Tinto's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 49 which means that the stock price compared with what market professionals expect for future profit levels is higher than 51% of comparable companies. In addition, Price-to-Book Capital (also referred to as market-to-book ratio) with an Price-to-Book Rank of 15 is also low. Compared with invested capital, the stock price is higher than for 85% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 19, is a SELL recommendation based on Rio Tinto's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Rio Tinto? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Rio Tinto only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Rio Tinto Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 63 (better than 63% compared with alternatives), Rio Tinto shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Rio Tinto. Profit Growth has a rank of 63 which means that currently professionals expect the company to grow its profits more than 63% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 67, and Stock Returns has a rank of 67 which means that the stock returns have recently been above 67% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 19 (81% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 63, is a BUY recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Rio Tinto Debt Financing Safety below-average
| SAFETY METRICS | May 25, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 64 |
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| REFINANCING | ||||||||
| REFINANCING | 11 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 85 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 49 |
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ANALYSIS: With an Obermatt Safety Rank of 49 (better than 49% compared with alternatives), the company Rio Tinto has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Rio Tinto is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Rio Tinto. Leverage is at a rank of 64, meaning the company has a below-average debt-to-equity ratio. It has less debt than 64% of its competitors. Liquidity is also good at a rank of 85, meaning the company generates more profit to service its debt than 85% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 11, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 89% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 49 (worse than 51% compared with alternatives), Rio Tinto has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Rio Tinto. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Rio Tinto Below-Average Financial Performance
| COMBINED PERFORMANCE | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 19 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 85 |
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| COMBINED | ||||||||
| COMBINED | 33 |
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ANALYSIS: With an Obermatt Combined Rank of 33 (worse than 67% compared with investment alternatives), Rio Tinto (Diversified Metals & Mining, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Rio Tinto are low in value (priced high) with a consolidated Obermatt Value Rank of 19 (worse than 81% of alternatives), and are riskily financed (Safety Rank of 49, which means above-average debt burdens) but show above-average growth (Growth Rank of 63). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 33, is a hold recommendation based on Rio Tinto's financial characteristics. As the company Rio Tinto shows low value with an Obermatt Value Rank of 19 (81% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 63% of comparable companies (Obermatt Growth Rank is 63). This is a typical case. Companies with above average growth tend to cost more than the sluggish variety. If this is a high-growth company, the low Obermatt Safety Rank of 49 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Rio Tinto, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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