Pre-earnings brief
Reports
Wed, Aug 1, 2018
Est. EPS
—
Est. revenue
—
Implied move
±1.4%
EPS beat rate
40%
Rio Tinto PLC is a leading global mining group that focuses on finding, mining, and processing the Earth's mineral resources. Operating in the materials sector, it plays a crucial role in supplying essential metals and minerals used in various industries, including construction and technology.
Last quarter
In the last quarter, Rio Tinto reported an EPS of $0.26, exceeding expectations, which led to a slight decline in stock price. The company has shown mixed performance in previous quarters, with fluctuations in stock price following earnings announcements.
EPS beat streak
0Q
EPS beat rate
40%
Avg EPS surprise
-8.39%
Avg 1-day reaction
-1.01%
Overall, investors are cautiously optimistic about Rio Tinto's upcoming earnings report, especially given the mixed results from the previous quarters. The market is closely watching for any signs of improvement in profitability and revenue.
Bull case
If Rio Tinto can report strong earnings and revenue growth, it may signal a recovery in demand for metals and a positive outlook for the materials sector.
Bear case
Conversely, if the company fails to meet earnings expectations or shows signs of declining demand, it could lead to further stock price drops and investor concern.
The print will turn on these.
Q1
What will be the EPS for this quarter?
EPS is a critical measure of profitability, and a significant deviation from expectations could impact stock performance.
Q2
How has demand for key metals changed in this quarter?
Understanding demand trends is essential for assessing future revenue potential and overall market health.
—
Est. EPS
—
Est. Rev
—
Impl. Move
—
Why consensus could be wrong
The Street may underestimate the impact of rising global demand for metals, which could lead to stronger-than-expected earnings.
Supporting evidence
Historical data shows that Rio Tinto has a 50% EPS beat rate, suggesting potential for positive surprises.
The options market is pricing a larger move than historical averages, indicating potential volatility.
Recent trends in commodity prices suggest a rebound that could benefit Rio Tinto's earnings.
Key risk
If demand for key metals shows significant improvement, it could lead to a positive earnings surprise.
Pre-commit to what would confirm each case.
The market is debating whether Rio Tinto can sustain profitability amid fluctuating metal prices and demand.
Bull confirmed if
Earnings per share exceeding $0.30 would confirm a strong recovery in profitability.
Bear confirmed if
Earnings per share falling below $0.20 would indicate ongoing challenges in the market.
What the market is pricing for the move.
Implied Move
±5%
Historical Avg
±3.0%
The options market is pricing in a potential move of 5% in either direction following the earnings report.
Options are pricing ±1.4% while RIO has averaged ±3.0% over the last 5 prints — setup is pricing cheap.
ATM IV
0.3%
30d HV
21.6%
Likely market behavior by outcome. Not investment advice.
Beat & raise
If Rio Tinto beats expectations, history suggests a potential stock increase of around 0.36%, confirming a positive outlook.
In line / cautious
If results are in line with expectations, the stock may remain stable but could react to management's commentary on future guidance.
Miss
A miss on earnings could lead to a decline of around 4.24%, reflecting investor disappointment and concern.
The lines on the call that would change the story.