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Understanding S11D’s Impact on Vale’s Earnings Estimates for 2017
Vale’s total volumes should see a significant boost from iron ore volumes as its S11D project starts commercial production.
What is Driving the Valuation for Iron Ore Miners?
Valuation multiple The EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is a widely used relative valuation multiple for capital-intensive industries such as metals and mining. It takes into account a company’s capital structure. By using this multiple, we can compare companies’ valuations. Miners’ EV-to-EBITDA Vale (VALE) has a forward EV-to-EBITDA multiple […]
Will Iron Ore Prices Benefit from China’s Credit Growth Prospects?
China’s aggregate financing stood at ~3.7 trillion Chinese yuan in January 2017, as compared to 1.6 trillion yuan in December 2016.
Which Iron Ore Miners Currently Look Undervalued or Overvalued?
Rio Tinto has received a boost due to its recent announcement regarding $5 billion of additional free cash flow generation through productivity improvements.
Icahn Lift or Commodity Drag: What Could Drive Freeport-McMoRan?
Freeport-McMoRan (FCX) jumped smartly in August after activist investor Carl Icahn disclosed his 8.5% stake in the company, known as the “Icahn lift.”
Inside China’s Credit Growth Metrics in April
By tracking credit growth in China, investors can gauge patterns that forecast future demand.
Why Rio Tinto Believes Iron Ore Prices Can Sustain
According to Bloomberg, Rio Tinto CFO Chris Lynch has suggested that iron ore prices will not collapse, as many expect.
Rio’s Earnings in 2017: What’s Impacting Its Estimates?
Analysts are concerned about Rio Tinto’s (RIO) overexposure to iron ore. The commodity contributes ~70% of Rio’s EBITDA.
These Could Be Vale’s Key Valuation Catalysts in 2017
Valuation multiple The EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is a widely used relative valuation multiple for capital-intensive industries such as metals and mining. The metric takes into account a company’s capital structure. By using this multiple, we can compare companies’ valuations. EV-to-EBITDA Vale (VALE) has a forward EV-to-EBITDA multiple […]
Which Iron Ore Miners Can Offer Valuation Upsides in 2017 and Beyond?
Vale SA (VALE) has a forward EV-to-EBITDA multiple of 6.1x, reflecting a 10% discount to its past five-year average multiple.
Should BHP Investors Expect a Valuation Upside?
BHP is trading at a forward EV-to-EBITDA of 6.0x, which represents an 11% discount to its last five-year average multiple.
These Factors Hit Rio Tinto’s Earnings Most
Rio Tinto returned to profitability in 2016 after a hard 2015. The company is now trying to sustain its margins in a low commodity price environment.
Understanding BHP Billiton’s Earnings Beat in Fiscal 2H17
BHP’s underlying net profit of $3.2 million was a solid improvement, as compared to the profit of $412 million in 4Q15.
These Iron Ore Stocks Could Offer a Valuation Upside in 2017
Vale has a forward EV-to-EBITDA multiple of 4.3x, which represents a discount of 37% compared with its past five-year average multiple.
Is Freeport-McMoRan Fairly Valued at Its Current Levels?
In this part of our series, we’ll share a valuation analysis for Freeport-McMoRan (FCX) and compare it with other companies in the mining space.
Which Iron Ore Miners Could Provide Valuation Upsides in 2017?
Vale (VALE) has a forward EV-to-EBITDA multiple of 6.6x, which is almost same as the average of its last four-year valuation multiple.
The Bulls Are Running on Iron Ore
Citigroup has downgraded BHP Billiton (BHP) and Rio Tinto (RIO) because the bank believes there could be a big pullback in commodities by the end of 2016.
Interpreting BHP Billiton’s Declining Coal Production: More to Come?
BHP Billiton’s coal business is the world’s largest supplier of seaborne metallurgical coal. Metallurgical coal production is vital to steel production.
Gold Bucks Commodities’ Downtrend on Trade War Jitters
Gold prices received a boost after President Trump’s tweet that 10% duties would be levied on $300 billion of Chinese goods starting on September 1.
Rio Tinto Beats 2018 Estimates and Declares Special Dividend
Rio Tinto (RIO) released its 2018 results on February 27. Its EPS of $5.12 beat consensus estimates by 5%.
Factors Driving Rio Tinto’s Earnings Estimates in 2019 and Beyond
Rio Tinto (RIO) (TRQ) stock has returned -9.8% YTD (year-to-date) as of December 21.
Why Is Goldman Sachs Extremely Sold on Gold in 2019?
In a report published on November 26, Goldman Sachs (GS) stated that commodities (COMT) could climb 17% in the coming months.
Will Chinese Steel Mills’ Pains Intensify with the Trade War?
Chinese steel producers have finally come under pressure after reaping significant benefits over the last three years.
Why Goldman Sachs Thinks Gold Prices Are ‘Extremely Attractive’
In a report published yesterday, Goldman Sachs (GS) stated that commodities (COMT) could climb 17% over the coming months.
China’s Slowdown Deepens as Trade War Takes a Toll
As the trade war between the United States (SPY) (VTI) and China (FXI) continues to escalate, China’s growth prospects are expected to be more affected than those of the United States.
Why Iron Ore Is Bucking Falling Price Trends Unlike Other Metals
Since the start of this year, there has been a severe fall in the prices of almost all commodities like copper, nickel, lead, cobalt, and gold.
Cleveland-Cliffs: China Iron Ore Demand Strong, Low Grades Suffer
China’s demand for seaborne iron ore dictates the commodity’s price because it consumes more than 70% of seaborne-traded iron ore (COMT).
Why Analysts Expect a Strong Pickup in Rio Tinto’s Margins
Rio Tinto (RIO) (TRQ) stock returned a positive 37.6% in 2017. The company has reignited its efforts to reduce its costs and increase its productivity.
Can We Expect a Rebound in Iron Ore Prices on Pent-Up Demand?
Morgan Stanley believes pollution control efforts in China would lead to lower demand for iron ore, particularly lower-grade ore.
Do Analysts See More Downside for Iron Ore Prices?
While GS has turned bearish on iron ore, Morgan Stanley (MS) believes that the recent pullbacks in commodity prices (COMT) could be a good opportunity to enter the sector.
How Analysts Factor Rio Tinto’s Earnings for 2017 and Beyond
While Rio Tinto’s revenues imply YoY growth of 17.0%, its EBITDA implies still higher growth of 41% to $17.5 billion in 2017.
What China’s Steel Production Outlook Has to Do with CLF and Iron Ore Prices
China is the largest consumer of the iron ore and contributes more than two-thirds of the world’s seaborne-traded iron ore.
Is China’s Easing Credit Growth in July a Temporary Measure?
New loans issued by Chinese banks fell month-over-month to 825.5 billion yuan compared to 1.5 trillion yuan in June.
What Might Lead to a Valuation Upside for BHP?
BHP Billiton (BHP) is trading at a forward EV-to-EBITDA multiple of 6.1x. It’s currently the highest among its close iron ore peers.
BHP Billiton Missed Estimates despite Surge in Earnings
BHP Billiton (BHP) released its fiscal 2017 results on August 21, 2017. Despite posting a fivefold increase in underlying profits, it missed analysts’ estimate.
Behind Deere’s Valuations ahead of Its Fiscal 3Q17 Results
As on August 14, Deere’s (DE) one-year forward PE (price-to-earnings) multiple stood at 18.3x, compared with Caterpillar’s (CAT) multiple of 18.8x.
These Factors Could Affect Vale Stock in 2H17
After significantly outperforming its peers in 1Q17, Vale’s (VALE) performance deteriorated in 2Q17.
Cliffs Natural Resources and China’s Steel Production
China’s steel production is hitting one record after another. Its production for June 2017 came in at 73.2 million tons, which was a monthly record.
Can China’s Selective Credit Growth Help Iron Ore Miners?
Aggregate financing, which measures liquidity, reflects the total funds provided by a financial system to its nonfinancial sectors and households.
How China’s Steel Production Outlook Could Affect CLF
After hitting record production of 72.8 million tons in April, China produced its second-highest steel volume of 72.3 million tons in May.
How Will China’s Credit Growth Tightening Affect Iron Ore?
Aggregate financing, which measures liquidity, is the total funds provided by a financial system to nonfinancial sectors and households.
Inside Vale’s Margin Expectations
Vale (VALE) has been aggressively trying to reduce its debt in recent years. In 1Q17 alone, it reduced its debt by $2.3 billion.
How Iron Ore Miners Are Seeing the Recent Price Correction
Rio Tinto’s (RIO) CEO (chief executive officer) said that the company can maintain cash returns even if iron ore prices drop to near record lows.
Why China’s Credit Growth Is Worrisome
China’s credit metrics and iron ore prices Financing is crucial to growth, as it stimulates consumption and investment in an economy. By tracking credit growth in China (MCHI), investors can gauge patterns that forecast future demand. Aggregate financing accelerates Aggregate financing measures liquidity by adding the total funds provided by a financial system to nonfinancial sectors and households. China’s aggregate […]
What Are the Key Valuation Catalysts for BHP Billiton?
BHP is trading at a 25% discount to its historical average multiple. Along with iron ore prices, oil prices have also driven BHP’s valuation.
Behind BHP Billiton’s Roller Coaster Ride in 1Q17
BHP Billiton’s (BHP) 4Q16 results were a beat on market expectations due to the rebound in commodity prices and productivity gains.
How China’s Credit Growth Affects Iron Ore
Financing, or the level of credit available, is crucial to growth, as it stimulates consumption and investment in an economy.
Idled Chinese Iron Ore Capacity to Come Back Online
Recently, some market participants have been concerned that the 30-month high iron ore prices in February 2017 were enough for some of the idled capacity in China to come back online.
Factors that Are Impacting Vale SA’s Earnings Estimates
Wall Street analysts covering Vale are projecting sales of $33.5 billion for 2017, implying a revenue rise of 22% year-over-year.
Recent Changes to Rio Tinto’s Earnings Estimates
Rio Tinto’s (RIO) EBITDA projection is $17.9 billion for 2017. Analysts have changed their earnings projections several times during the last year.
How Long Can Seaborne Iron Ore Prices Support Cliffs Stock?
Iron ore prices finished 2016 with a rise of more than 80.0%. The average for seaborne iron ore prices in 2016 was $58.50 per ton.
Seaborne Iron Ore: Cliffs’ CEO Weighs In
Cliffs Natural Resources management is quite upbeat on the prospects of seaborne iron ore prices in 2017.
Will China’s Tightening Measures Curb Credit Growth in 2017?
According to the People’s Bank of China, new loans issued by Chinese banks in December 2016 totaled 1.0 trillion Chinese yuan, higher than 794.6 billion yuan in November.
Can Iron Ore Prices Continue Defying Analysts’ Forecasts in 2017?
Iron ore prices remained stubbornly high in 2016 despite most analysts’ expecting the contrary. In this article, we’ll see how analysts view iron ore’s prospects in 2017.
How China’s Credit Growth Might Progress in 2017
According to the People’s Bank of China, new loans issued by Chinese banks in November were 794.6 billion yuan, which is higher than 651 billion yuan in October.
Why Analysts Are Still Negative on Iron Ore in the Long Term
Many analysts have upgraded their iron ore price forecasts due to the recent strength in prices. Many still aren’t confident of the long-term fundamentals of the commodity.
Do Earnings Estimates for Vale Have an Upside?
Two major factors are driving estimates for Vale. Going forward, its total volumes should see a significant boost from iron ore volumes as its S11D project ramps up.
Why Margin Projections for Rio Tinto Have Seen a Boost
Analysts are concerned about Rio Tinto’s (RIO) (TRQ) overexposure to iron ore. The commodity contributes ~70% of Rio’s earnings.
Can China’s Credit Growth Support Iron Ore Prices?
China’s credit metrics Financing, or the level of credit available, is crucial to growth because it stimulates consumption and investments in an economy. By tracking credit growth in China (MCHI), investors can gauge patterns that forecast future demand. Aggregate financing lower Aggregate financing measures liquidity by adding the total funds provided by a financial system to nonfinancial sectors and households. […]
BHP Billiton’s and Rio Tinto’s Take on Iron Ore Prices
BHP Billiton’s and Rio Tinto’s take Rio Tinto (RIO) announced that operations at its Hope Downs 4 mine in Western Australia will be shut down for two weeks over Christmas. The company hopes to achieve the fiscal production it’s guided for before that and the break should allow it to reduce operating expenses and maximize cash. […]
Did Iron Ore Speculation Cause the Spike in Spot Prices?
Speculative frenzy in iron ore Iron ore prices have risen since the beginning of the year, contrary to analysts’ expectations. While Chinese demand fundamentals were boosted by the country’s announcement of further easing and public spending, most market participants believed it wasn’t enough to kick-start a rally of the magnitude we’ve seen. There was a […]
What Will Drive BHP Billiton’s Coal Production Going Forward?
BHP Billiton’s metallurgical coal production rose 1.0% to 11.0 million tons, partly due to a 16.0% rise in volumes at Cerrejon, offset by a 15.0% fall in volumes at New South Wales.
What Prompted JPMorgan Chase to Upgrade Vale?
The word on Wall Street The market has given a consensus rating of “hold” to Vale (VALE). Of the 30 analysts covering the stock, 13% have given it a “buy” recommendation, 23% have recommended a “sell,” and 64% have given it a “hold” rating. Vale’s target price is $5.75, which implies a downside potential of 1%. Scotia […]
Why’s Rio Tinto Getting Under Analysts’ Skin?
Factors impacting Rio’s estimates Analysts are concerned about Rio Tinto’s (RIO) (TRQ) overexposure to iron ore. It contributes ~70% of Rio’s EBITDA (earnings before interest, tax, depreciation, and amortization). Analysts’ long-term views on iron ore prices are still bearish. They expect prices to start correcting in 4Q16 and to remain weaker going forward as Vale’s […]
What Analysts Think of Iron Ore Miners with Prices Still Volatile
Macquarie upgraded its earnings estimates for BHP Billiton (BHP) and Rio Tinto (RIO). As a result, it upgraded BHP to “outperform” from “neutral.”
What’s the Single Largest Driver for Vale’s Revenues, Earnings?
Stronger iron ore prices and management execution have led to an impressive share price rise of 61% YTD through September 20, 2016, for Vale SA (VALE).
What Caught the Attention of Analysts Evaluating Vale SA?
Analysts are happy about Vale’s volume growth in the coming years due to its ongoing expansion project. But they’re still wary of lower prices.
Overexposure to Iron Ore Pressures This Key Fundamental for RIO
Analysts are concerned about Rio Tinto’s (RIO) overexposure to iron ore. It contributes 70% to Rio’s EBITDA.
Why the IMF Believes China’s Credit Growth Is Unsustainable
The broad money supply rose by 10.2% year-over-year in July, which is the slowest pace of growth since April 2015.
Iron Ore Price Performance Puts Contrarian Views to Shame
Commodity (COMT) producers, especially iron ore producers, have experienced nothing short of a miracle in 2016. Despite the majority of market participants believing the contrary, iron ore prices have rallied in 2016.
What Could Drive BHP Billiton’s Free Cash Flows for Fiscal 2017?
BHP Billiton’s (BHP) (BBL) unit costs declined by 16% in fiscal 2016, supported by increased capital efficiency. This helped BHP generate strong free cash flow.
Market Reaction to BHP Billiton’s Largest Loss of Fiscal 2016
On August 16, 2016, BHP Billiton (BHP) (BBL) reported a loss of $6.4 billion for fiscal year ended June 30, 2016. But BHP’s results were not without positives.
Fading Risks Are Working in Favor of Emerging Markets
Low commodity (GSG) prices in the first quarter of the year impacted commodity-driven emerging markets like Russia, Brazil (EWZ), Indonesia, and Venezuela.
Can Alcoa Generate Positive Free Cash Flows in 2016?
Alcoa (AA) generated free cash flows of $55 million in 2Q16—compared to $205 million in the same quarter last year.
Rio Tinto’s Earnings during 1H16 Were Driven by This
Rio Tinto reported its 1H16 results on August 3, 2016. Its underlying earnings came in at $1.6 billion, 7% ahead of consensus expectations of $1.5 billion.
Rio Tinto’s Recent Developments: What Do They Mean?
On June 7, 2016, Rio Tinto (RIO) announced a new cash tender offer to repurchase debt notes worth up to $3 billion. It’s the company’s second debt buyback offer in about two months.
Factors That Will Determine if Iron Ore’s Rally Will Continue
Commodities (COMT) have rallied in 2016 despite many analysts’ expecting the contrary. Iron ore in particular has enjoyed a spectacular run.
ArcelorMittal’s 2Q16 Earnings: What’s the Word on Wall Street?
ArcelorMittal (MT) is set to release its 2Q16 financial results on July 29. It’s crucial for steel companies to justify their price movements with solid 2Q16 earnings.
Will AK Steel Shed Red Ink in 2Q16 as Analysts Expect?
Analysts expect AK Steel (AKS) to post adjusted EBITDA of $108 million in 2Q16. The company posted EBITDA of $81 million in 1Q16.
How Fallen Angels Could Reward Investors
Fallen angel bonds—high-yield bonds originally issued with investment grade credit ratings—are generally known for offering potential value. A big source of this value has been the tendency of fallen angels to be oversold below what may be considered fair value, leading to a downgrade to high yield. A less obvious source of value for fallen angels […]
Why Has Steel Been a Winner in 2016?
Steel has been among the best performing industrial metals (COMT) this year. So far, HRC (hot-rolled coil) prices in the US have gained ~67%.
Will Capacity Closures Hurt Alcoa’s 2Q16 Revenues?
Alcoa (AA) has been proactive in curtailing its high-cost capacity to survive in the current pricing environment.
Why Is BHP Predicting Another 10 Years of Glut for Iron Ore?
BHP Billiton’s (BHP) CEO Andrew Mackenzie said that there will be at least ten years of iron ore oversupply before demand-supply balances itself.
What Is Driving Earnings Estimates for BHP Billiton?
Since the beginning of 2016, analysts have revised BHP Billiton’s EBITDA downward by ~30% for the next four quarters.
Is It the Right Time for Miners to Shore Up Their Balance Sheets?
Higher commodity prices have provided an opportunity to miners with high debt to reduce their debt burden. April saw iron ore prices rise above $70 per ton compared to a low of $38 per ton in December 2015.
Why Is Rio Tinto Opting for a Debt Buyback?
On June 7, 2016, Rio Tinto (RIO) announced a new cash tender offer to repurchase debt notes worth up to $3 billion due in 2018, 2020, 2021, and 2022.
Is the Speculative Frenzy in Iron Ore About to End in China?
Iron ore prices have increased since the start of the year. This raised concerns about speculative trading supporting the iron ore price rally in the futures market.
Why Did China’s Credit Growth Slow Down in April?
China’s aggregate financing came to 751 billion yuan in April, down sharply from 2.3 trillion yuan in March. According to the PBoC, it was partly due to a decrease in corporate bond issuance.
Why Is the Iron Ore Price Rally Losing Steam?
In this series, we’ll analyze the demand-supply fundamentals for iron ore and see whether the recent surge was a one-off phenomenon or the start of a more sustained uptick in prices.
What Do Analysts Recommend for Vale?
While Vale has had a strong run this year due to firmer commodity prices, not many analysts believe that the rally is sustainable in the long run.
How Real Is the Recent Iron Ore Price Rally?
Compared to the low point iron ore’s price reached on December 11, 2015, prices rose an impressive 55% to $62 per ton as of April 14, 2016.
What’s behind China’s Weak Credit Metrics in February?
Financing, or the level of credit available, is crucial because it stimulates consumption and investment in an economy.
Vale Missed Expectations in 4Q15: Is More Downside Ahead?
Investors were not very happy with Vale’s earnings miss or management’s commentary, which suggested the company could take drastic measures to weather the prolonged commodity price weakness.
CVR Partners: 4Q15 Earnings Beat Analysts’ Estimates
CVR Partners reported its 4Q15 earnings on February 18, 2016. It reported an EPS (earnings per share) of $0.27. It beat analysts’ estimate of $0.23 per share.
Rio Tinto Surprised the Markets with Dividend Policy Change
Rio Tinto’s 2015 results were mostly in line with market expectations. Underlying EBITDA and underlying profits were $12.6 billion and $4.5 billion, respectively.
Does Cliffs Natural Resources Have Comfortable Liquidity Runway?
Cliffs Natural Resources (CLF) ended 4Q15 with $450 million in liquidity. This includes $285 million in cash and cash equivalents.
Lower Commodity Prices Ate into Freeport-McMoRan’s 4Q15 Revenues
Freeport-McMoRan has given a guidance of 5.1 billion pounds of copper, 1.8 million ounces of gold, 20 million pounds of molybdenum, and 57.6 MMboe for 2016.
Commodity Prices to Affect Alcoa’s Upstream Performance in 2016
There are three key factors that appear likely to drive the Alcoa’s upstream performance in 2016. We have commodity prices, physical premiums, and cost cuts.
Assessing BHP’s Coal Volumes Target in 1H16
BHP Billiton’s coal business is the world’s largest supplier of seaborne metallurgical coal. Metallurgical coal is a key input in steel production.
The Consensus and Analysts’ Estimates for Iron Ore
As compared to previous median estimates, the market expects iron ore weakness to extend beyond 2016, with median forecasts at $49 per ton for 2017 and 2018.