What's coming up for Fortescue shares in October?

Should investors be digging into Fortescue shares this month?

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Fortescue Metals Group Ltd (ASX: FMG) shares could be in for a big month in October 2023. An important update will come in the form of the quarterly production report for the three months to 30 September 2023.

It hasn't been that long since the business reported its FY23 result, but we've come to the end of the FY24 first quarter.

What could influence Fortescue shares this month?

Profitability is a key factor for most operating businesses. Every quarter, Fortescue tells us about how much iron ore it produced, the average revenue it got for the production, its production costs, as well as other things.

Fortescue's revenue is largely decided by the price it sells its iron ore at, and how much of the commodity it sells, so these quarterly updates can give investors a real insight into its financial performance.

The iron ore price recovered during the quarter to more than US$110 per tonne, so it could be another decent quarter for its margins.

Fortescue will also probably tell the market about what its net debt position is, so we'll get an insight into the balance sheet.

In terms of iron ore shipments, Fortescue said that for FY24 it's guiding between 192mt to 197mt, including approximately 7mt for Iron Bridge. With those annual numbers, we can roughly see what sort of quarterly number Fortescue is expecting.

We're also likely to hear from the company about the progress it has made on its efforts with green hydrogen, as well as battery business and the initiatives to decarbonise its own operations.

The other main thing that could impact Fortescue shares during the month is changes in the iron ore price. Why? As a commodity business, its mining costs are generally the same month to month, whereas a rise in the iron ore price is largely just extra profit for the business, which can then be a boost for the Fortescue share price with how the market focuses on profitability. A fall in the iron ore price would largely reduce the profit.

Is it an opportunity?

Analysts are largely negative on the iron ore miner at the moment.

According to analyst ratings collated by Factset, there are 12 sell ratings, one hold rating and just two buy ratings.

Some analysts believe that the iron ore price is going to fall, which may happen, though the commodity has held up remarkably well. The construction sector is reportedly not doing great in China, but there are other steel uses that could be supporting demand, such as (electric) vehicle production and renewable energy.  

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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.

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