Why Rio Tinto, Fortescue and BHP shares could get a major earnings upgrade

BHP shares are up 10% since early August and tailwinds may persist.

Key points
  • BHP, Rio Tinto, and Fortescue appear poised for material earnings upgrades due to strong spot commodity prices.
  • Strong performances in copper and defiance of iron ore price drop predictions have led to share price gains for the mining companies since August.
  • Despite recent revenue declines, the strength in core metals prices suggests a favourable earnings outlook for these major ASX 200 miners. 

BHP Group Ltd (ASX: BHP) shares could be set for a material earnings upgrade.

And the S&P/ASX 200 Index (ASX: XJO) mining giant isn't alone.

Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG) also look well-positioned for earnings upgrades.

That's according to Ten Cap's Jun Bei Liu.

Liu noted that her fund has been increasing its exposure to resources, as China's improved economic outlook has helped support core metals prices, including iron ore and copper.

Copper is trading near multi-year highs at US$10,669 per tonne.

As for iron ore, many analysts had been forecasting the industrial metal to dip to the US$90 per tonne (or below) range by this time of year. But in good news for the ASX 200 miners, the industrial metal has defied those bearish expectations to trade above US$100 per tonne since early August.

Iron ore is currently trading for US$104 per tonne.

That's helped push BHP shares up 9.5% since market close on 1 August. Rio Tinto shares have gained 14.6% over this period, while the Fortescue share price is up 8.1%.

And Ten Cap's Liu believes all three are due for earnings upgrades.

"We think some of the major names like BHP, Fortescue and Rio will see earnings upgraded by almost 10% because of the strength in spot commodity prices," she said (quoted by The Australian Financial Review).

Mining equipment and red iron ore against blue sky.

Image source: Getty Images

What's been happening with Rio Tinto, Fortescue, and BHP shares?

The last major announcement from Fortescue was the release of the miner's FY 2025 results on 26 August.

Highlights included record iron ore shipments over the 12 months of 198.4 million tonnes.

However, Fortescue saw an 18% year-on-year decrease in its Hematite (an iron oxide mineral) average revenue to US$85 per dry metric tonne. This saw FY 2025 revenue down 15% to US$15.5 billion. And the miner's net profit after tax (NPAT) plunged 41% to US$3.4 billion.

BHP shares were in sharp focus on 19 August, when the miner reported its FY 2025 results.

The mining giant reported an 8% year-on-year decline in revenue to US$51.26 billion, with revenues under pressure from lower iron ore and coal prices. Underlying profit attributable to BHP shareholders of US$10.16 billion was down 26%.

As for Rio Tinto, the miner released its half-year results on 30 July. For the six months, Rio Tinto achieved a small increase in consolidated sales revenue to US$26.87 billion. With no thanks to iron ore.

Rio's iron ore revenue dropped 18% over the six months to US$12.52 billion.

But with commodity prices firming, Rio Tinto, Fortescue, and BHP shares could indeed see an upswing in earnings when they next report.

Motley Fool contributor Bernd Struben 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 recommended BHP Group. 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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