South32 (S32.AX)
Materials · ASX · Australia
Fundamentals
Valuation and ratings
South32 trades at A$3.92, which is 84% below the A$7.20 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 48 out of 100, which is a moat, but not a deep one. 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 30.9 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 South32
South32 Limited operates as a diversified metals and mining company. The company operates through Worsley Alumina, Brazil Alumina, Brazil Aluminium, Hillside Aluminium, Mozal Aluminium, Sierra Gorda, Cannington, Hermosa, Australia Manganese, and South Africa Manganese segments. It has a portfolio of assets producing bauxite, alumina, aluminum, copper, silver, lead, zinc, and manganese products. The company has operations in Australia, Bahrain, China, Japan, Italy, Mozambique, South Africa, the Netherlands, Brazil, South Korea, the United States, rest of Middle East, rest of Asia, rest of Europe, rest of North America, and rest of Oceania. South32 Limited was incorporated in 2000 and is headquartered in Perth, Australia.
S32.AX passes 4 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Common questions
Is South32 (S32.AX) undervalued?
Against our discounted cash flow estimate of A$7.20, S32.AX at A$3.92 is 84% 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 S32.AX's P/E ratio?
S32.AX trades at 30.9 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.
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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.