Rio Tinto PLC
🇬🇧 RIO.LSE · London · GB0007188757
Materials
GBX 7102.00 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
11.4
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 7102.00 ÷ 621.17 = 11.4
TTM period through: 2025-12-31
Forward P/E (estimated): 8.8
Based on analyst estimates
Reference: Provider P/E (Trailing): 15.5
Yield (Fwd)
4.21%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 5.65%
Net Debt/EBITDA (TTM)
0.7x
Latest quarter: 1.4x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): 1.4x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
48.1%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 61.7%
Cash Flow Payout (TTM): 35.8%
FCF Coverage (TTM): 0.78x
ROE
16.4%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
7.4x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
While Rio Tinto is a top-tier global mining giant with a pristine balance sheet, its reliance on highly cyclical commodity prices makes it unsuitable for conservative dividend strategies seeking predictable income. The track record of multiple dividend cuts, including a proposed 21.9% reduction for 2026, reflects this inherent volatility. Not recommended for new positions despite the attractive 11.43 P/E valuation, as the fundamental business model creates an ongoing strategy mismatch.
Sector Context
Rio Tinto is one of the world's largest mining and metals companies, primarily extracting iron ore, copper, aluminum, and critical minerals. However, as a pure commodity producer, the company is a 'price taker' whose revenues and cash flows are highly cyclical, directly conflicting with conservative dividend strategies that require predictable, non-cyclical essential services.
Temporary Opportunity Identified
Cyclical downturns in specific commodity prices (like iron ore) and ongoing concerns regarding Chinese industrial demand are depressing near-term earnings and driving multiple dividend reductions.
📊 Strategy Analysis
- • Pristine balance sheet with Net Debt/EBITDA of 0.70x and Debt/Equity of 0.40, providing immense financial resilience to weather cyclical downturns.
- • Attractive valuation with a TTM P/E of 11.43 and forward P/E of 8.77, sitting comfortably within the preferred 8-15x value range.
- • Strategic pivot towards energy transition metals (copper, lithium, aluminum) and recent exit from diamond mining aligns the portfolio with long-term electrification trends.
⚠ What to Watch
- • Operates as a pure commodity producer (price taker), which fundamentally conflicts with the strategy's requirement for predictable, recession-resistant essential services.
- • Track record of extreme dividend volatility, with previous cuts in 2020, 2022, 2023, 2025, and a newly proposed 21.9% cut for 2026 tied directly to cyclical commodity markets.
- • Current Free Cash Flow coverage for the dividend is weak at 0.78x, and the 5-year EPS CAGR has contracted by 13.3%, raising sustainability concerns.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-05
Disclaimer: This information is for educational purposes only. Not financial advice.