Rio Tinto Group (RIO)
Valuation Overview•Is Rio Tinto Group Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Moderate quality score of 69/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street sentiment is generally neutral. This is paired with healthy capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
RIO demonstrates strong business quality with robust profitability and healthy margins. This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company is facing top-line contraction (-5.5% 3Y CAGR) however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 27.2% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $27.1B | -0.7% | -5.5% | +4.4% | +1.2% | |
| EBITDA | $10.1B | — | -16.0% | — | — | |
| Net Income | $4.6B | +14.9% | -18.2% | — | +5.9% | |
| EPS (Diluted) | $2.79 | +14.8% | -18.3% | +7.7% | +7.3% | |
| Free Cash Flow | $2.3B | -26.0% | -30.7% | -8.7% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 27.7% | 50.0% | 57.2% | 57.4% |
| Operating Margin | 27.2% | 30.8% | 35.4% | 32.3% |
| Net Margin | 19.4% | 20.8% | 23.5% | 20.3% |
| FCF Margin | 11.8% | 14.3% | 18.6% | 18.4% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q1'26Latest | $3.71 | $3.73 | +0.5% | ||
| Q3'25 | $3.12 | $2.79 | -10.6% | ||
| Q1'25 | $3.23 | $3.51 | +8.7% | ||
| Q4'24 | $3.49 | $3.56 | +2.0% | ||
| Q2'24 | $3.76 | $3.00 | -20.2% | ||
| Q3'23 | $3.59 | $3.14 | -12.5% | ||
| Q1'23 | $2.97 | $2.26 | -23.9% | ||
| Q3'22 | $5.01 | $5.47 | +9.2% |
Total return is +82.8% (1Y), outperforming the benchmark by +57.8%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +26.0% | +16.7% | — |
| 1Y | +82.8% | +57.8% | +7.1% |
| 3YCAGR | +19.5% | +0.9% | +18.8% |
| 5YCAGR | +9.5% | -3.0% | +34.2% |
| 10YCAGR | +17.3% | +4.2% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Rio Tinto Group (RIO) valuation, health, and returns.
Rio Tinto Group is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +26.4% upside to DCF intrinsic value of $126.53)
Rio Tinto Group has multiple valuation anchors: DCF Intrinsic Value: $126.53 | Peer Relative Fair Value: $179.63 | Wall Street Analyst Target: $101.75 (implying +1.7% upside). A convergence of these signals offers higher conviction.
Rio Tinto Group displays good financial health with a composite quality score of 69/100, supported by a Altman Z-Score of 4.5 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 18.6%.
Rio Tinto Group pays a 4.3% dividend yield, covered by a 61% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
Rio Tinto Group's current growth trajectory is Accelerating. The company achieved -0.7% 1Y revenue growth and +14.8% 1Y EPS growth, compared to its 3Y revenue CAGR of -5.5%.
Wall Street consensus is Hold based on 31 analysts, beating EPS expectations in 42% of recent quarters with a 1-quarter streak. The consensus price target represents a +1.7% change from current levels.
Investment risks for Rio Tinto Group include: -17.5% 1-year max drawdown. Volatility risk is characterized by a beta of 1.25x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.