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Rio Tinto looks like a buy on valuation, Societe Generale says

  • It's time to buy Rio Tinto (RIO +1.6%) after shares have dropped 8% in the past week thanks to falling iron ore prices, Societe Generale analysts say as it sees potential gains of more than 30%.
  • The recent fall in iron ore prices, even if not reversed, should result in downward revision to near term consensus earnings forecasts but should not put meaningful downside pressure on longer term earnings forecasts for RIO, the firm says.
  • RIO shares are trading on an implicit 2015 estimated P/E of 9.4x, well below BHP Billiton's (BHP) 13.8x, Antofagasta's (ANFGY) 18.9x, and Vedanta Resources' (VDNRF) 90.3x; the firm recommends investors buy RIO shares and hedge the risk by selling more steeply priced base metals producers.
Comments (1)
  • spike77
    , contributor
    Comments (42) | Send Message
     
    Well it's 'long' for me on Rio, and it always was when I bought in a couple of months ago. A financially strong company hitting a low due to fears of iron ore price falling. Exactly the time to buy - particularly with an attractive dividend. You can be sure that this is a situation which won't last too long - so buy and sit it out
    12 Mar, 05:05 PM Reply Like
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