Rio Tinto Limited (ASX: RIO) shares have been on a tear since 1 November.
On the back of a big surge in the price of iron ore and copper, shares in the S&P/ASX 200 Index (ASX: XJO) listed miner have gained a whopping 41% since the closing bell on 31 October.
Atop the share price gains, Rio Tinto also pays a fully franked trailing dividend yield of 7.7%.
Of course, that's all water under the bridge.
With the miner reporting its full-year results next Wednesday, 22 February, many ASX 200 investors are wondering, is it a good time to buy shares before those results are released?
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To buy or not to buy?
Buying Rio Tinto shares before it releases the full-year results is not without risk.
Shares could see a significant move lower, as well as higher, on the day.
One of the things investors will be keeping a close eye on is the earnings guidance provided by management, alongside any forward-looking statements, particularly involving its growth projects. If guidance comes with growth expectations, Rio Tinto shares could gain on the day.
Another key factor will be whether the company exceeds or falls short of consensus expectations. Any outperformance will offer headwinds for the share price while falling short of market forecasts could usher in some selling on the day.
What kind of profit is the market expecting from Rio Tinto shares?
According to the latest research from Goldman Sachs, consensus estimates forecast full-year underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$26.7 billion.
That's down 29% from the underlying EBITDA of US$37.7 billion reported last year. But as the decline is widely expected, much of that fall will already be priced in.
Goldman has a slightly higher EBITDA forecast of US$26.8 billion for FY23, believing Rio's copper and minerals segment will outperform.
Profits will be another metric that could send Rio Tinto shares higher or lower next Wednesday.
Consensus expectation forecast net profit after tax (NPAT) of US$13.7 billion. Goldman believes NPAT will fall short of that and come in at US$12.9 billion, citing higher than expected depreciation and amortisation, rehab costs and tax.
Then there's the dividend payout.
Consensus forecasts are for Rio Tinto to pay a full year, 100% franked dividend of US$4.92 per share, a steep drop from the US$7.93 per share paid out last year. Goldman believes the market is being optimistic here. Its analysts forecast a final payout of US$4.64 per share.
Which brings us back to the question, should investors snap up some Rio Tinto shares before the ASX 200 miner reports next week?
Well, as a longer-term investor, I know that timing the market is no easy thing. I also know that longer-term the world is going to need a lot more iron ore, copper and aluminium.
And with Goldman Sachs issuing a target price of $132 on Rio Tinto shares – some 6% above Friday's closing price – I'd say Rio Tinto shares are well worth considering adding to your long-term portfolio.
Before, or after, the company reports.
