The Rio Tinto share price delivered a disappointing performance in April. Here’s why

Shares in the big miner have not had a good month.

| More on:
a man wearing a hard hat stands in front of heavy mining machinery with a serious look on his face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Rio Tinto shares fell 5% following a weakened first-quarter production report
  • Management signalled a number of challenging macro-environmental factors impacting the company's operations
  • A few brokers gave their take on what they believe is the value of Rio Tinto shares

The Rio Tinto Ltd (ASX: RIO) share price tumbled last month after the company reported a disappointing quarterly trading update.

At Friday’s market close and for end of April, the mining giant’s shares finished almost 5% down. This is despite the company edging around 4% higher in the last three trading days of the month.

What’s going on with Rio Tinto shares?

Investors were heading for the exits as the Rio Tinto share price fell more than 10% following the company’s first-quarter results.

Rio Tinto delivered its first-quarter production report on 20 April, revealing a soft performance across the board.

Management acknowledged another difficult quarter operationally despite the commencement of underground mining at Oyu Tolgoi.

Market expectations were revised downwards amidst sustained high inflation, the Russia-Ukraine war, and a resurgence of COVID-19 lockdowns in China.

While commodity prices increased due to disruptions in supply, production diminished because of downside risks to near-term construction activity.

Nonetheless, the miner stated that full-year shipments guidance remains unchanged.

The news sent Rio Tinto shares backtracking almost 3% on the day.

Rio Tinto noted that further downside risks include a prolonged war, extended labour and supply shortages, and monetary policy adjustments.

What do the brokers think?

A number of brokers weighed in on Rio Tinto’s shares after the release of its latest performance report.

Analysts at Goldman Sachs cut its price target by 1% to $135.10. Based on the current share price, this implies an upside of around 20%. Clearly, the broker believes there is still significant value in the miner despite the short-term volatility.

On the other hand, Morgans had a more bearish tone, slashing its 12-month rating by 6.6% to $114.00. This is in line with where the Rio Tinto share price traded on Friday.

Rio Tinto share price review

Over the past 12 months, Rio Tinto shares have dipped by about 7%. Although, when looking at 2022, its shares have gained almost 13% for the period.

On valuation grounds, Rio Tinto commands a market capitalisation of roughly $41.88 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

a man wearing a hard hat and a high visibility vest stands with his arms crossed in front of heavy equipment at a mine site.
Broker Notes

Should investors dig the Fortescue share price in July?

Fortescue is suffering in the sell-off. Will things get better in July?

Read more »

An engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the background
Resources Shares

Why did the Rio Tinto share price plunge 11% in June?

Let's analyse the month just gone by.

Read more »

Young boy with glasses in a suit sits at a chair and reads a newspaper.
Resources Shares

How did the Fortescue share price perform in June?

The iron ore producer's shares have been experiencing a rough patch of late.

Read more »

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Resources Shares

Why did the BHP share price take a tumble in June?

BHP shares dropped into the red in June. Here's what happened...

Read more »

A businessman hugs his computer.
Ask a Fund Manager

I loved this ASX share a year ago, and it’s still my long-term pick: expert

Ask A Fund Manager: Datt Capital's Emanuel Datt consistently names the same stock as the one he would hold for…

Read more »

A miner holds two hands full of coal, indicating share price movement for coal and energy companies
Resources Shares

Own Soul Patts shares? Here’s how much of its portfolio is exposed to coal

Is Soul Patts heavily invested in coal shares?

Read more »

Gold bars and Australian dollar notes.
Resources Shares

Do Evolution Mining shares pay a dividend?

The ASX 200 mining shares are known as good dividend payers -- is Evolution among them?

Read more »

A woman frowns and crosses her arms.
Resources Shares

What’s dragging on the Fortescue share price today?

Fortescue's shares have dropped into the red today...

Read more »