Are Investors Undervaluing Rio Tinto (RIO) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Rio Tinto (RIO). RIO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.70 right now. For comparison, its industry sports an average P/E of 9.85. Over the past 52 weeks, RIO's Forward P/E has been as high as 12.28 and as low as 5.36, with a median of 7.55.
Another notable valuation metric for RIO is its P/B ratio of 1.55. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.31. Over the past year, RIO's P/B has been as high as 1.92 and as low as 1.13, with a median of 1.51.
Another great Mining - Miscellaneous stock you could consider is South32 (SOUHY), which is a # 2 (Buy) stock with a Value Score of A.
South32 sports a P/B ratio of 1.13 as well; this compares to its industry's price-to-book ratio of 3.31. In the past 52 weeks, SOUHY's P/B has been as high as 1.92, as low as 0.98, with a median of 1.24.
Value investors will likely look at more than just these metrics, but the above data helps show that Rio Tinto and South32 are likely undervalued currently. And when considering the strength of its earnings outlook, RIO and SOUHY sticks out as one of the market's strongest value stocks.
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Rio Tinto PLC (RIO) : Free Stock Analysis Report
South32 Ltd. (SOUHY) : Free Stock Analysis Report
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