Rio Tinto Ltd (ASX: RIO) shares are in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner closed yesterday trading for $112.34. In late morning trade on Tuesday, shares are changing hands for $113.28 apiece, up 0.8%.
Despite that welcome uptick, the ASX 200 mining stock remains down 17% year to date.
Much of that selling pressure has come alongside the large retrace in the iron ore price this year.
The industrial metal kicked off 2024 trading at US$144 per tonne. Today that same tonne is trading for just under US$90.
As you're likely aware, the sell-down in iron ore has been driven by slumping demand from China, as the world's number two economy continues to struggle to regain its growth trajectory.
With the Chinese government withholding from unleashing 'bazooka' stimulus measures so far, China's steel-hungry property market has been a particular laggard.
While that's had a negative impact on Rio Tinto shares and the miner's dividends, Rio Tinto does count amongst the world's lowest-cost producers of the steel-making metal, with a break-even price of around US$45 per tonne.
And the miner has been expanding its copper footprint as well.
With this in mind, we return to our headline question.
Image source: Getty Images
Are Rio Tinto shares trading for a bargain now?
According to Ord Minnett's Tony Paterno, who has a buy rating on Rio Tinto shares, that would be a yes (courtesy of The Bull).
"The 2024 interim result met expectations. Underlying earnings and consolidated sales revenue were both up 1% on the prior corresponding period," Paterno said.
He added:
The global miner is retaining its dual listing company structure on the ASX and London Stock Exchange.
The business is stable and has the capacity to engage in merger and acquisition activity. Volume growth is now returning to the portfolio.
The interim results that Paterno mentions were reported on 31 July. Investors appeared pleased with those results, with Rio Tinto shares closing the day up 2.5%.
Highlights included a 1% year on year increase in sales revenue for the six months to US$26.80 billion. And underling earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 3% to US$12.09 billion.
It's worth noting that iron ore EBITDA was down 10% year on year to US$8.8 billion, while copper EBITDA went the other way, increasing 67% to US$1.8 billion.
The interim fully franked dividend in Aussie dollars increased a fraction of a percent to $2.617 a share.
Taking a step back to look at the longer-term picture, Rio Tinto shares are up 24% over the past five years despite the 2024 retrace. And that doesn't include the 10 dividends paid out over this period.
