Glencore best positioned among peers, Macquarie says
Glencore
378.00p
15:45 15/11/24
Glencore is best-positioned among peers in terms of its commodity exposure, cost performance and potential for cash returns, analysts at Macquarie said.
BHP Group Limited NPV (DI)
2,056.00p
15:45 15/11/24
FTSE 100
8,060.61
15:45 15/11/24
FTSE 350
4,453.56
15:45 15/11/24
FTSE All-Share
4,411.85
15:45 15/11/24
Mining
10,633.77
15:45 15/11/24
Rio Tinto
4,804.50p
15:45 15/11/24
A global benchmarking analysis looking at ten metrics showed Glencore ranked first or second on seven of those, analysts Alon Olsha and Shai Hill said, even if Rio Tinto and BHP Billiton are best ranked historically.
The shares also offer twice the potential profit growth than its peers over the next five years, the analysts said.
Furthermore, Macquarie expected the outfit's commodity basket, especially zinc and copper, to show the strongest price momentum over the next three years.
With $12bn in excess cash to distribute by 2019 and with management owning 15% of the firm, Glencore had both the financial wherewithal to reward shareholders and a good reason to use it, they said.
Share price failing to reflect superior growth profile
Despite all of the above, the stock was trading on the lowest EV/EBITDA multiple of its peer group.
Hence, the broker's new 385.0p target "might be too conservative" with an unchanged 'outperform' recommendation.
"Applying the multiples implied by our BHP and Rio valuations would yield a fair value of 450p."