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HomeEconomyWhy Rio Tinto Group (RIO) Is An Undervalued Opportunity

Why Rio Tinto Group (RIO) Is An Undervalued Opportunity

Rio Tinto Group (NYSE: RIO) is in the business of mining and processing commodities across the world, but perhaps the most important material it delivers is iron ore. RIO has the largest portfolio of iron ore assets with 16 mines. The demand for this raw material is set to grow worldwide at a CAGR of 3.7% between 2022 and 2026 to reach 2.7 billion metric tonnes.

Shares for RIO have fallen low enough that the company can be considered undervalued. The company is currently trading 39% below the MarketBeat consensus price target with a low P/E ratio relative to its historical levels and that of its peer companies in the metal and minings industry. Its current P/E is 6.41 compared to the industry’s P/E ratio of 9.4. 

Shares of RIO have slumped 8.59% YTD due to the broader sell-off in the stock market as well as due to the outlook of iron ore. China purchases 70% of the world’s seaborne iron ore which it uses to produce steel for its…

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