Own Rio Tinto shares? Here's your quarterly update preview

What is the market expecting from this mining giant?

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Rio Tinto Ltd (ASX: RIO) shares are starting the week strongly.

In afternoon trade, the mining giant's shares are up 3% to $132.05.

This appears to have been driven by a solid end to the week for commodities such as aluminium, copper, and iron ore.

In addition, some investors may have been buying shares in anticipation of a strong quarterly update from the miner on Wednesday.

With that in mind, let's now take a look to see what the market is expecting from Rio Tinto's first-quarter update this week.

Rio Tinto quarterly update preview

According to a note out of Goldman Sachs, its analysts are expecting a mixed set of numbers from the miner on Wednesday.

For example, the broker is forecasting iron ore shipments of 75.5Mt for the quarter. This will be down 12% from the previous quarter and 9% year on year. It is also short of the consensus estimate of 79.6Mt.

Alumina production is also expected to be weaker quarter on quarter. Goldman is forecasting production of 1,802kt for the three months, which is down 6% from the fourth quarter of FY 2023. Once again, this is short of the consensus estimate, which is for production of 1,950kt.

The good news is that Goldman expects Rio Tinto's aluminium and copper production to both increase quarter on quarter and be ahead of consensus estimates.

Aluminium production is forecast to increase marginally to 848kt (consensus estimate: 824kt) and copper production is forecast to lift 13% to 181kt (consensus estimate: 171kt).

Are Rio Tinto shares a buy?

Goldman still sees room for Rio Tinto's shares to rise from current levels. It currently has a buy rating and a $140.20 price target on them. Based on its current share price, this implies a potential upside of 6.1% for investors.

In addition, the broker is forecasting a fully franked 5.1% dividend yield in FY 2024. This increases the total potential return beyond 11% for investors.

Goldman named five reasons why it is bullish on the mining giant. It said:

Buy rated on: (1) compelling relative valuation vs. peers, (2) attractive FCF and Div yield, (3) strong production growth in 2024-2025E of ~5-6% CuEq driven by the ramp-up of the Oyu Tolgoi UG copper mine & a recovery at Escondida and Bingham, higher Pilbara Fe shipments with the ramp-up of new mines, (4) potential for FCF/t improvement in the Pilbara, and (5) high margin low emission aluminium business.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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