Rio Tinto Limited (ASX: RIO) has enjoyed a once-in-a-lifetime commodity boom and subsequent bust.

This boom/bust cycle has sent shareholders on a roller-coaster ride with the share price soaring from around $30 in 2003 to over $150 in 2008. The share price is currently at $47 which is roughly the same price level the shares were trading at in the wake of the global financial crisis in 2009.

So could the future be bright for Rio Tinto’s shareholders? Here are two reasons to believe that it could be…

Strategic focus

Rio isn’t sitting on its laurels having recently unveiled a new organisational structure and executive team to drive future performance. This drive will be led by newly installed CEO Mr Jean-Sebastien Jacques and will see a new organisational structure being implemented.

The structure will consist of four product groups, namely: Aluminium, Copper and Diamonds, Energy and Minerals, and Iron Ore. A newly shaped Growth and Innovation group which will focus on future assets and technical support will also be formed.

Pricing

The cyclical nature of a commodity business means that in the good times a miner such as Rio Tinto or BHP Billiton Limited (ASX: BHP) earns huge profits, but in the bad times profits dwindle.

A review of Rio’s historic earnings paints the picture.

Back in 2008 the group earned nearly $10 per share. This year and next, consensus forecasts provided by Reuters are estimating the group will earn around $2.10 per share.

The key to valuing a mining stock such as Rio is to focus on ‘through the cycle’ earnings and not to fall into the trap of projecting current earnings into perpetuity.

Assuming commodity prices are near the bottom of the cycle at present, then the longer term prospects for Rio’s earnings appear positive and its share price is arguably attractive.

3 Rotten Shares to Sell, and 1 to Buy Today

It might be too late to sell your Rio Tinto shares but there are some stocks that should be given the flick...After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.