The share price of Australian-British mining company Rio Tinto, one of the world’s largest iron, aluminum and copper producers, has lost more than 40% of its value in the last 12 months.
At the same time, the company is in an exceptionally good position thanks to its global diversification in many different commodities and also thanks to strong corporate figures. In addition to relatively low debt ($13.5 billion total debt versus EBIDTA of $33.6 billion debt and free cash flow (after interest & dividends) of nearly $15 billion), the company shows a return on assets of 18.4% and a return on equity of nearly 42%.
However, according to an industry study, the company is struggling with economic uncertainties and cost pressures. The risk that the half-year figures might miss expectations is likely to have contributed to the recent share price declines.
Chart-wise, Rio Tinto’s share price is in a slight uptrend after breaking the downtrend since early June at around $56.00. There, the stock marked its last high at over $78.00 and then lost almost 32% at times. With the low at $54.00, the stock has tested 2 years of support and is now 11% higher, at just under $60.00.
If the rise continues, the $64.00 level could be tested as the next possible resistance. In a weaker scenario, however, the support at $56.00 could be tested again.