You are here: Home - Investing - Experienced Investor - News -

Stock of the week: Rio Tinto

Written by:
Graham Spooner, investment research analyst at The Share Centre, picks FTSE 100 giant Rio Tinto as stock of the week.

Mining giant Rio Tinto may be UK-based, but its operations make it truly a global company. The group’s main operations are for iron ore as well as interests in aluminium, copper, gold, diamond and lead, with the majority of earnings generated from the base metal side of the group. Interested investors should note that by being one of the lowest cost producers, Rio Tinto’s management believes the group should be better positioned to ride out the lower price environment than some of its peers.

The 2016 full year results have shown that operational performance combined with a more conservative balance sheet have allowed the company to steer well through the depressed price environment. Group revenues fell by $1bn to $33.8bn but underlying earnings rose by 12% to $5.1bn while the net debt fell by 30% to $9.6bn. Income seekers should appreciate that this good performance has allowed management to raise the full year dividend materially ahead of expectations and announce a $500m share buyback programme.

Encouragingly, the company remains convinced of the strength of the long term demand outlook, despite the short term uncertainties. Rio Tinto expects global steel demand to rise by 2.5% a year until 2030. Therefore, it’s keen on progressing with current major investment projects, along with cost cutting measures. The group’s planned expansion projects indicate that the group will continue to focus on its core business of extracting iron ore. We continue with our Buy recommendation for investors looking for a balanced return and willing to accept a medium to higher level of risk.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Three value and three growth funds for your ISA

Confused as to which funds you should be putting in your ISA before the tax year ends? Fund Calibre's research...