Rio Tinto Ltd (ASX: RIO) shares will be on watch next week.
That's because the mining giant will be releasing its third quarter update on Wednesday.
Ahead of the release of this update, let's take a look and see what the market is expecting the miner to report.
Rio Tinto third quarter preview
According to a note out of Goldman Sachs, its analysts are expecting Rio Tinto to report iron ore shipments of 86.2Mt for the three months ended 30 September. This is ahead of the consensus estimate of 85.1Mt and represents a 7% quarter on quarter increase.
Also expected to grow quarter on quarter is Rio Tinto's aluminium production. The broker is forecasting production of 837kt, which is an increase of 2% on the second quarter. This is also ahead of the consensus estimate of 830kt.
Goldman is also ahead of the market with its bauxite production estimates. This is expected to come in at 14.3Mt compared to the consensus estimate of 14Mt. However, Goldman's estimate represents a 3% quarter on quarter decline.
Copper production is expected to be flat at 171kt according to Goldman. Though, the consensus estimate is for a small quarter on quarter increase to 176kt.
Finally, Goldman expects alumina production to be 1,714kt for the three months. This will be up 2% quarter on quarter but is lower than the consensus estimate of 1,756kt.
Should you invest?
Goldman Sachs remains very positive on the mining giant and sees plenty of value in its shares.
Earlier this week, the broker retained its buy rating and $137.90 price target on Rio Tinto's shares. Based on its current share price of $119.87, this implies potential upside of 15% for investors over the next 12 months.
The broker believes its shares have a compelling relative valuation and an attractive dividend yield (estimated to be 4.9% in FY 2025). It said:
We are Buy rated on RIO.AX and RIO.L based on: (1) Compelling relative valuation, (2) Attractive FCF and dividend yield, (3) Strong 2-year production growth (~5%) from iron ore and copper, (4) Pilbara turnaround (~50% of group NAV), (5) Compelling high margin low emission aluminium exposure. Our 12m PT of A$137.90/sh and GBP69/sh are set at an equal blend of NAV and EV/EBITDA with a 6.0x target multiple.
Overall, this could make the miner a good option if you are looking for exposure to this side of the market.
