Analysts confident for miners Rio Tinto, Antofagasta and KAZ Minerals

Buoyed by its iron ore operations, mining giant Rio Tinto (RIO) is expected to deliver year-on-year profit growth for 2020, although not by enough to pass our ‘over 10 per cent forecast current year earnings growth’ test.  Analysts don’t appear bothered by any perceived over-reliance on iron, as the consensus forecast (going by our FactSet data) is for over a 30 per cent profit increase in the 2020-21 financial year.  Perhaps they are being too optimistic, as margins would be vulnerable to any fall in the iron ore price. Furthermore, new assets that will help the company get on the right side of the ESG boom will probably take longer than one year to come on stream, but investors will hope analysts’ confidence bodes well for the shares and maintenance of the juicy dividend. 

Chile-focussed miner Antofagasta (ANTO), fails the same two tests as Rio Tinto - the other one they both come up short against is one-month share price momentum. Its FY forecast earnings growth for the current year is just 1.1 per cent (FactSet) but that’s followed the next year by a bumper 70 per cent growth forecast. Antofagasta did reasonably well in a period when copper prices were low, and clearly analysts are confident the company will cash in when the renewable energy focus drives copper prices higher.

The same confidence is shown towards Kazakhstan-focussed Kaz Minerals (KAZ), which is another miner with a significant copper operation. It passes seven out of eight momentum tests, with the only one failed being the same 10 per cent current year upgrade. In the following financial year, however, the consensus is for nearly 48 per cent higher profits compared to the current period.