Could history repeat itself?
The post The Fortescue (ASX:FMG) share price fell 11.5% last time the company reported appeared first on The Motley Fool Australia. –
The Fortescue Metals Group Limited (ASX: FMG) share price has collapsed around 15% since the beginning of the year. This comes as the fourth largest iron ore miner has experienced a declining spot price of the steel making ingredient.
At Friday’s market close, Fortescue shares finished the day flat at $20. It’s worth noting that its shares have fallen off a cliff after hitting a record high of $26.58 in late July.
What happened to Fortescue shares last earnings season?
During the time when Fortescue reported its half-year results for FY21, its shares plummeted 11.5% within two weeks.
Initially, investors were excited about the company’s performance, as it highlighted a 44% increase in revenue and a strong dividend payout. Furthermore, shipments, earnings and operating cash flow surpassed any half year in Fortescue’s history.
Fortescue CEO, Elizabeth Gaines commented:
Fortescue’s performance for the first half of FY21 has been outstanding, and we are very proud of the whole team who have delivered our best half year operating and financial results since the Company was established.
However, this was quickly forgotten as attention turned to Chinese tariffs and restrictions on Australian goods. Investors appeared to be concerned that China may focus on the country’s largest export market, and were rightly so. In response, the spot price of iron ore tanked, shedding 6.1% of its value to US$163.60 a tonne.
Only late in March, the Fortescue share price rebounded, following a strong uplift in the steel making ingredient spot price.
Is the Fotrescue share price a buy?
A recent broker note released by Bell Potter cut its outlook on Fortescue shares by 8.4% to $22.03. Goldman Sachs also reduced its rating by 2.9% to a more bearish $19.90.
Based on today’s closing Fortescue share price, this is in line with the Goldman Sachs broker estimate.
Fortescue commands a market capitalisation of roughly $61.5 billion, with more than 3 billion shares on its books.
Should you invest $1,000 in Fortescue right now?
Before you consider Fortescue, you’ll want to hear this.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.