SteadySharesSteadyShares
Try now

Fortescue Ltd. (FMG.AX)

Materials · ASX · Australia

A$18.87-8.13% today

Fundamentals

Market capA$56.87B
P/E ratio10.5
Dividend yield6.71%
Revenue growth (YoY)+10.5%
Profit margin22.8%
Return on equity18.7%
52-week rangeA$16.51 to A$23.38

Valuation and ratings

DCF fair valueA$40.63
Upside to fair value+115.3%
Analyst target (mean)A$18.85
Analyst rangeA$15.34 to A$23.95
Analysts covering17
Consensus viewunderperform
Moat score73/100
Overall rating88/100, Strong Buy

Fortescue Ltd. trades at A$18.87, which is 115% below the A$40.63 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.

Our moat model scores it 73 out of 100, which is a wide moat. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.

It changes hands at 10.5 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.

About Fortescue Ltd.

Fortescue Ltd engages in the exploration, development, production, processing, and sale of iron ore in Australia, China, and internationally. The company explores for copper and lithium deposits; and rare earth elements. It owns and operates rail and port facilities; and focuses on producing green energy and green hydrogen, including derivatives comprising green ammonia, as well as green technology development and manufacturing. The company was formerly known as Fortescue Metals Group Limited and changed its name to Fortescue Ltd in November 2023. Fortescue Ltd was incorporated in 1983 and is headquartered in Perth, Australia.

Industry: Other Industrial Metals & MiningEmployees: 15,745HQ: Australia

FMG.AX passes 6 of our 30 screens today

Each screen prints the exact criteria it used, and the circumstances in which it is wrong.

Undervalued on cash flow
Companies trading at least 25% below what our discounted cash flow model says the future cash is worth today.
Quality at a fair price
Good businesses, not cheap ones. A wide moat and a strong rating, at a multiple that has not run away.
Deep value, with a pulse
A very low earnings multiple is usually a warning. This screen demands a low multiple AND evidence the business still works.
Dividend powerhouses
Yields above 3%, filtered for the one thing yield screens never check: whether the company can actually afford it.
Growth at a reasonable price
Real growth, without the multiple that usually comes attached to it. The middle ground between value and growth, and the hardest place to find anything.
Low volatility defensives
Companies that move less than the market and pay you to wait. The holdings that let you sleep, and let you hold everything else.

Common questions

Is Fortescue Ltd. (FMG.AX) undervalued?

Against our discounted cash flow estimate of A$40.63, FMG.AX at A$18.87 is 115% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.

What is FMG.AX's P/E ratio?

FMG.AX trades at 10.5 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.

The full research page for FMG.AX, with financial statements, ownership detail, peer comparison and alerts, is free inside the app.

Open FMG.AX in the appFree guides and screens

Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.