How heavily are miner’s discounting commodity price falls?

Thursday 2 February 2017

Via Deutsche:

1. Miners are still in an earnings upgrade cycle Share prices look to be pricing in current earnings forecasts, but spot prices imply large upgrades to forecasts (over 50%). Many companies are on singledigit PE ratios using spot prices.

2. Free cash flows reaching record highs – plenty coming to shareholders High commodity prices and restrained capex should create record free cash flows for miners. Free cash flow yields in the double digits should ensure higher dividends and potential buybacks for shareholders.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.