Growth Declines Despite the Increased Production

Rio Tinto Plc (NYSE: RIO) engages in the exploration, mining, and processing of minerals in four segments: Iron Ore, Aluminium, Copper, and Minerals. With a market cap of $104B, the company is considered to be a large cap.

Despite the macroeconomic challenges, the metal industry is expected to experience significant growth in the coming years. It will be fueled by high demand from several end-use sectors such as automotive, aviation, energy & power, construction, manufacturing, and many more similar sectors.

A major Capital Expenditure

At the start of this August, Rio Tinto Plc announced that it would acquire Pan American Silver’s 57.74% stake in Agua de la Fada for $45 million, along with the grant of net smelter returns royalties. It also bought 100% of nearby concessions known as Meridian Property for $550,000. This capital expenditure was expected to diversify and increase market market-captured percentage.

The Recent Results

In the quarter, which ended in June 2023, the production of aluminium increased by 11.4% compared to the year reaching a total of 814 thousand tons. Similarly, copper production and iron ore production also saw growth of 3.2% and 2.9% respectively. In the same period, copper production reached 130 thousand tons and iron ore reached 70.6 thousand tons.

However, despite the increment in the production, this firm’s reported sales revenue amounted to $26.67B. That showed a negative revenue growth in this period. The underlying EBITDA stood at $11.73B while the free cash flow reached $3.77B during this time frame. Moreover, this firm recorded a profit after tax of $5.12 billion for the given period with a net margin of 7.9%.

Technical Analysis and Prediction of the RIO Stock Price

At the press time, the RIO stock price is trading at $62.9 after the bears reclaimed the resistance level of $66.01. The immediate support level for the bulls is at $60.1, as the bulls are trying to get past the 50-day exponential moving average price of $63.

The Relative Strength Index (RSI) is currently at its neutral zone of 51 after returning from its oversold level of 26 back in mid-August. This stock’s RSI index has given enough space for the bulls to get past the level of 50 DEMA.

The prediction for the RIO stock price will be bullish if the bulls can sustain above the level of $63. Suppose, the bears reclaim that level, then the stock will return to its immediate support

Conclusion

Rio Tinto Plc (NYSE: RIO) has made a good amount of capital expenditure throughout the year. This has helped the business in increasing its production. However, despite the increasing production, revenue was not reported with growth. The current price trend is in consolidation.

Technical Levels

Resistance Levels: $66, and $69

Support Levels: $60, and $57

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks or related indexes comes with a risk of financial loss.