Fortescue Ltd (ASX: FMG) shares have been in the spotlight this week after the mining giant released its FY 2026 results.
Are its shares a buy? Let's see what analysts at Bell Potter are saying about the miner.
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What is the broker saying?
Bell Potter notes that Fortescue released a mixed result this week, with revenue and EBITDA slightly ahead of expectations, but net profit and dividends falling short. It said:
FMG reported mixed FY26 results, with revenue and EBITDA slightly ahead of our forecasts and consensus but NPAT and dividend a miss. Key metrics included revenue of US$16,966m (vs BPe US$16,491m, up 9% YoY), underlying EBITDA of US$8,635m (vs BPe US$8,382m, up 9% YoY) and underlying NPAT of US$3,458m (vs BPe US$3,723m, up 3% YoY). Statutory NPAT was impacted by an impairment of US$750m (Iron Bridge) and a US$104m (Yindjibarndi compensation) for US$598m post tax cost and statutory NPAT of US$2,870m, down 15% YoY.
Speaking about its dividend and outlook, Bell Potter adds:
FMG's declared a final dividend of A46cps (vs A60cps YoY) for total FY26 dividends of A108cps at a 6.0% fully franked yield, a key support for the FMG share price. This was lower (A110cps YoY) despite higher production and a higher iron ore price. FY27 guidance was reiterated, for shipments of 197-207Mt at C1 cost US$20.50- US$21.75/wmt, implying +13% YoY cost inflation and that margins and earnings will remain under pressure.
Adding downside risk is pricing pressure from centralised Chinese buying group CMRG. FMG provided limited commentary on the progress of ongoing negotiations, but stated that all it seeks is a return to "fair and proper market practices", implying that is not currently what's on offer.
Should you buy Fortescue shares?
According to the note, in response to the results, Bell Potter has retained its hold rating on Fortescue shares with a trimmed price target of $17.10.
Based on its current share price of $17.95, this implies potential downside of around 5% for investors over the next 12 months.
However, Bell Potter expects a 3.3% dividend yield in FY 2027, reducing the total potential negative return.
Commenting on its recommendation, the broker said:
There are no material EPS changes in this report. FMG's core iron ore operations continue to perform well. However, broad input cost inflation, subdued iron ore price fundamentals, a rising AUD and potential impacts to price realisation all put pressure on our earnings and dividend forecasts. We retain our Hold rating and do not yet see the positive catalysts to re-enter the stock. Our NPV-based valuation is lowered 2%, to $17.10/sh.
