The Rio Tinto Ltd (ASX:RIO) share price has decreased 13.0% since the start of 2024. Meanwhile, the Transurban Group (ASX:TCL) share price is 3.1% away from its 52-week high.
RIO share price in focus
Founded in 1873, Rio Tinto is a global leader in the exploration, development, production, and processing of minerals and metals. It is currently the world’s second-largest mining and metals company, following BHP.
Rio Tinto’s diverse portfolio is grouped into four key product categories: Aluminium, Copper & Diamonds, Energy & Minerals, and Iron Ore.
Its largest export is iron ore, a critical ingredient in steel production, meaning the company’s performance is closely linked to the price of iron ore and other essential commodities.
TCL shares
Transurban, founded in 1999, manages and develops urban toll road networks in Australia, Canada and the United States.
Transurban has an interest in 22 urban motorways across its portfolio. Some of its notable motorways include the CityLink in Melbourne, Hills M2 in Sydney and the Logan Motorway in Brisbane.
Transurban invests heavily in the development of new projects which are paid back through collecting toll revenue from motor vehicles.
RIO share price valuation
We would consider RIO to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, Rio Tinto Ltd reported a debt/equity ratio of 25.0%, meaning the company has more equity than debt.
Over the last 5 years, RIO has delivered an average dividend yield of 6.4% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, RIO reported an ROE of 18.2%. For a mature business you generally want to see an ROE of more than 10%, so RIO clears this hurdle.
In FY24, Transurban Group reported a debt/equity ratio of 175.1%, meaning the company is leveraged.
As for dividends, since 2019 TCL has achieved an average dividend yield of 3.6% per year, and in FY24 reported an ROE of 3.0%
Keep in mind that these are only a small selection of metrics. We don’t have enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
