The Fortescue Metals Group Ltd (ASX: FMG) share price has been volatile this year. But is the iron ore miner a buy today?
Whilst Fortescue shares have risen slightly over the past six months, it is actually down 17% in the last month.
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What's going on with the Fortescue share price?
Only the transacting investors know why they trade at higher or lower prices. But commodity businesses often follow the price of that commodity.
Fortescue is one of the world's largest iron ore miners, so changes in the iron ore price can have a significant impact on the Fortescue share price.
There has a been a recovery from the lows of late 2021. There was a brief dip during February 2022, but the iron ore price has gone back close to the 2022 highs. There is an ongoing market focus on the Russian invasion and inflation.
But results can also have an impact on the Fortescue share price. It was less than a month ago that the company announced its half-year result for the six months to 31 December 2021.
FY22 half-year result
The company reported a 13% decline in revenue after a 16% decline in the average revenue per dry metric tonne of iron ore to US$95.58. The C1 cost increased by 20% to US$15.28 per tonne.
The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 28% to US$4.76 billion, whilst net profit after tax (NPAT) fell 32% to US$2.78 billion.
However, the company noted that there was a strong operating performance across Fortescue's supply chain, together with the successful integration of Eliwana, which contributed to record first half iron ore shipments and ore processed.
The miner decided to pay an interim dividend of $0.86 per share, representing a 70% payout of first half NPAT.
Fortescue Future Industries (FFI)
As the operations of FFI get bigger, it could have a bigger influence on the Fortescue share price.
What's FFI? It's aiming to take a global leadership position in green energy and green technology, leading the charge to decarbonise hard-to-abate sectors. It's investing to create a global portfolio of green energy projects to supply 15 million tonnes per year of renewable green hydrogen by 2030.
It has received planning approval from the Queensland Government for the green energy manufacturing centre in Gladstone (Queensland). The first stage development is an electrolyser manufacturing facility with an initial capacity of 2GW per year.
Fortescue Future Industries also recently announced that it had formed a working agreement with Airbus to target a plane that runs on green energy by 2035.
Is the Fortescue share price a buy?
Quite a few brokers actually think that the Fortescue share price is a sell.
Credit Suisse rates it as 'underperform' with a price target of just $14 because of the valuation compared to its iron ore mining rivals like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). It also wants more information on FFI.
Morgan Stanley rates the Fortescue share price as 'underweight' with a price target of just $13.
Ord Minnett rates the miner as a 'hold' but the price target is $21 – more than 10% higher than where it is now.
