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Inflation has been a boon to several industries. Among them, anything having to do with basic materials or mining. Higher prices meant higher profits for these stocks. However, that trend is coming to an end. Earnings estimates have been moving the wrong direction for this industry. It’s taken the Mining – Miscellaneous industry down to the Bottom 27% of our Zacks Industry Rank. One of these stocks is today’s Bear of the Day.
I’m talking about Zacks Rank #5 (Strong Sell) Rio Tinto (RIO - Free Report) . Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium. It also owns and operates open pit and underground mines, mills, refineries, smelters, power stations, and research and service facilities.
The reason for the unfavorable Zacks Rank is the series of negative earnings estimate revisions coming from analysts. Over the last sixty days, three analysts have cut their estimates for the current year and next year. The negative moves have cut current year estimates down from $12.21 to $9.61 while next year’s number is off from $9.09 to $7.91. That means that EPS is actually forecast to contract by 26.81% this year and 17.66% next year. That’s coming on revenue growth of 16.2% this year and a contraction of 10.79% this year.
While the Mining – Miscellaneous industry is not even in the top half of the industries we rank, there are a couple of stocks which are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) stocks Cameco (CCJ - Free Report) and Uranium Energy (UEC - Free Report) .
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Bear of the Day: Rio Tinto (RIO)
Inflation has been a boon to several industries. Among them, anything having to do with basic materials or mining. Higher prices meant higher profits for these stocks. However, that trend is coming to an end. Earnings estimates have been moving the wrong direction for this industry. It’s taken the Mining – Miscellaneous industry down to the Bottom 27% of our Zacks Industry Rank. One of these stocks is today’s Bear of the Day.
I’m talking about Zacks Rank #5 (Strong Sell) Rio Tinto (RIO - Free Report) . Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium. It also owns and operates open pit and underground mines, mills, refineries, smelters, power stations, and research and service facilities.
The reason for the unfavorable Zacks Rank is the series of negative earnings estimate revisions coming from analysts. Over the last sixty days, three analysts have cut their estimates for the current year and next year. The negative moves have cut current year estimates down from $12.21 to $9.61 while next year’s number is off from $9.09 to $7.91. That means that EPS is actually forecast to contract by 26.81% this year and 17.66% next year. That’s coming on revenue growth of 16.2% this year and a contraction of 10.79% this year.
While the Mining – Miscellaneous industry is not even in the top half of the industries we rank, there are a couple of stocks which are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) stocks Cameco (CCJ - Free Report) and Uranium Energy (UEC - Free Report) .