FSUMF - Fortescue: An Iron Ore Giant With Strong Cash Flows

2024-04-15 23:00:44 ET

Summary

• Fortescue Metals has performed well, with a 25% increase in stock price and a total return of approximately 30% since September.
• The company's financial results show strong cash flow and low production costs, resulting in a gross profit margin of just under 60%.
• Fortescue is expected to continue generating cash and may maintain earnings above US$2/share, trading at around 8 times earnings.

Introduction

About seven months ago, I argued Fortescue ( FSUMF ) ( FSUGY ) was a good call option on the iron ore price , and I have not been disappointed with its performance. The stock is currently still up about 25% from the September 2023 share price, while the received dividend of A$1.08 represents an additional income for a total return of approximately 30%. The share price reached a high of around A$30/share at the end of January before losing some momentum as the iron ore price weakened....

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