Rio Tinto Group (RIO): A Bull Case Theory

We came across a bullish thesis on Rio Tinto Group on The Value Beehive’s Substack by The Bee. In this article, we will summarize the bulls’ thesis on RIO. Rio Tinto Group's share was trading at $63.72 as of September 8-. RIO’s trailing and forward P/E were 10.15 and 10.72 respectively according to Yahoo Finance.

Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company operates through Iron Ore, Aluminium, Copper, and Minerals Segments. It is currently trading at a significant discount relative to both its sector peers and the broader market, with a trailing P/E of approximately 8× as of September 2025. Forward earnings estimates remain modest, keeping the stock’s valuation attractive on an earnings basis. The company generated roughly $9.5 billion in free cash flow in 2024, translating to a price-to-FCF multiple of about 7×, which is materially lower than the industry median of around 15×. Even after accounting for cyclical fluctuations in key commodities like iron ore and copper, Rio Tinto’s stock remains historically cheap, suggesting a compelling entry point.

The combination of a strong free cash flow profile and undervalued earnings positions the company as an attractive opportunity for both equity and cash-focused investors. This mispricing, relative to historical and peer benchmarks, implies substantial upside potential if commodity cycles normalize or if the market re-rates the stock closer to industry multiples, making Rio Tinto a standout candidate for value-oriented investors seeking exposure to high-quality mining assets at discounted valuations.

Previously we covered a bullish thesis on Teck Resources Limited (TECK) by Gregg Jahnke in December 2024, which highlighted the company’s shareholder-focused strategy, net cash position, and strong copper and zinc assets supporting growth potential. The company's stock price has depreciated approximately by 12.48% since our coverage. The thesis still stands as TECK maintains strategic positioning. The Bee shares a similar perspective but emphasizes Rio Tinto’s undervaluation, strong free cash flow, and historically cheap multiples.

Rio Tinto Group is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held RIO at the end of the first quarter which was 39 in the previous quarter. While we acknowledge the potential of RIO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.