The Rio Tinto Limited (ASX: RIO) share price is pushing higher on the eve of its half-year results release.
At the time of writing, the mining giant's shares are up over 2% to $99.20.
Judging by its strong showing, investors appear optimistic that Rio Tinto is going to impress with its half-year update tomorrow.
Image source: Getty Images
What is the market expecting from Rio Tinto's half-year results?
While the market is expecting a strong result from Rio Tinto, it won't be as strong as this time last year.
According to a note out of Goldman Sachs, both its analysts and the market are expecting the miner to report a reduction in earnings year on year. Here's a summary of what the market is expecting
- Revenue
- Goldman Sachs: US$29,655 million
- Consensus: US$30,785 million
- Underlying EBITDA
- GS: US$15,671 million
- Consensus: US$16,813 million
- Dividends per share
- GS: US$3.18 per share
- Consensus: US$3.30 per share
- Special dividends per share
- GS: US$0.50 per share
- Consensus: US$0.67 per share
What will the drivers of the result be?
Goldman Sachs is forecasting underlying EBITDA of US$15,671 million, which would be down 25.5% over the prior corresponding period.
This is expected to be driven largely by softer earnings from the key iron ore segment. The broker has pencilled in iron ore EBITDA of US$10,176 million and underlying iron ore earnings of US$6,273 million. This will be a 37% and 39% decline, respectively, over the prior corresponding period.
Offsetting some of this will be the miner's aluminium business. Goldman is expecting a 51% increase in aluminium EBITDA to US$2,912 million and an 85% increase in underlying earnings to US$1,706 million for the period.
Is the Rio Tinto share price good value?
While buying before a results release can be very risky, Goldman Sachs certainly sees plenty of value in Rio Tinto's shares at the current level.
Despite forecasting earnings below consensus estimates, the broker has a buy rating and $124.10 price target on the miner's shares. This implies a potential return of 25% for investors over the next 12 months before dividends.
