Rio Tinto - Comparative Multiple Analysis

Rio Tinto (Comparative Multiple Analysis)


Notes on the Comparative Multiple Analysis of Rio Tinto

WikiWealth compares Rio Tinto's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with Rio Tinto's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Rio Tinto.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Rio Tinto's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for Rio Tinto's Analysis

How does this work? The Comparative Investment Analysis determines the value of Rio Tinto by comparing Rio Tinto financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of Rio Tinto.

See the Rio Tinto cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in Rio Tinto.

Also, see the Rio Tinto's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and Rio Tinto's valuation conclusion for a quick summary.