RIO
Rio Tinto Group
$90.32
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 63.9% above fair value
You pay
$90.32
Bear
$52.25
Fair
$55.12
Bull
$60.40
Bear
$52.25
-42.2%
3% stage 1 growth, 11% discount
Fair
$55.12
-39.0%
4% stage 1 growth, 11% discount
Bull
$60.40
-33.1%
5% stage 1 growth, 11% discount
Adjust Assumptions
3.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
33%
Implied Market Multiple
20.9x
Market is pricing in (growth)
9.6%
vs 3.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$103.13
Divergence from AlphaVal
47%
Summary
Using a two-stage FCF DCF with 4% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $55.12 per share.
Warnings
Wall Street's average price target is $103.13 (from 31 analysts). Our estimate is 47% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions