Iron's Free Fall Has Rusted Fortescue Metals
- A significant drop in benchmark iron ore prices and wider spreads for lower-quality ore has walloped Fortescue's realized prices and pinched its profits and free cash flow generation.
- Fortescue should stay free cash flow positive with realized prices at or above $70/mt, but there's a substantial value-per-share difference between surviving and thriving.
- A 5.5x multiple to lowered FY2015 expectations suggests a fair value above $10.50, but Fortescue is really only appropriate for aggressive risk-tolerant investors looking to play a rally in iron.
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Jan. 3, 2014, 8:59 AM| Comment!
Sep. 25, 2013, 10:59 AM
- Global iron ore prices are expected to trade in a range just below current levels in Q4 and beyond, miners Vale (VALE -0.7%) and Fortescue Metals (FSUMF.PK, FSUGY.OB) say, reflecting optimism Chinese demand will stay resilient.
- A top Vale executive expects more moderate demand growth but no big decline in China, the world's top iron ore consumer; he predicts prices of $120-$130/metric ton in Q4.
- Vale's expansion plans to raise annual production capacity to 480M metric tons by 2018 from 306M this year remain intact, the exec also says.
Apr. 4, 2013, 7:42 AMThe iron ore market will be move into surplus this year for the first time in a decade, says Morgan Stanley, and continue there until at least 2018. It's not rocket science - mine expansion projects announced during the boom years are coming online just at the time demand begins to slump. The question for miner investors: Is this already baked into their stock price? | 2 Comments
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Fortescue Metals is principally engaged in the operation of an integrated logistics chain starting with the mining of iron ore from the company's Cloudbreak mine site, the railing of product along the company's heavy haul rail line through to the loading of ships at the company's port facility... More
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