Insider Concerns Just Created a Buying Opportunity in Rio Tinto plc (RIO)

On 12 February, shares of Rio Tinto plc (NYSE:RIO) closed higher after a volatile session. The shares accumulated 0.14 points or 0.25 percent at $55.92 with a heavy trade volume of 4.603 million shares. After opening the session at $56.08, the shares went as high as $56.18 and as low as $55.61, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $94.4 billion and now has 1.69 billion shares outstanding. Rio Tinto plc (RIO) stock has gained 10.71 percent of market value in 21 trading days.

RIO stock has a trailing 3-year beta of 0.86, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $5.79 a share in the trailing twelve months. The stock’s value has surged 15.35 percent year to date (YTD) against a rise of 4.1 percent in 12 month’s time. The company’s shares still trade -7.91 percent away from its 1-year high of $60.72 and 25.32 percent up from 52-week low of $44.62. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

History has shown that shares in Rio Tinto plc have gone up on 1 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings.

The stock is currently hovering around the first support level of $55.63. Below this, the next support is placed in the zone of $55.33. Till the time, the RIO stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 68.13 on daily chart, which may remain a cause for concern. If the price breaks below $55.33 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $56.2 mark may result into a pull-back move towards $56.47 level.

Shares of Rio Tinto plc (RIO) are trading at a P/E ratio of 9.63 times earnings reported for the past 12 months. The industry RIO operates in has an average P/E of 12.84. Its P/E ratio went as low as 10.35X and as high as 28.6 over the 5-year span.Further, it is sporting a 2.32 on the Price-to-Sales ratio. Compare this with the industry average P/S of 15.19.