Shares of the ASX-listed Fortescue Metals Group Limited (AU:FMG) fell despite the company reporting a higher profit in its FY24 results and increasing its dividend. The company’s NPAT (net profit after tax) rose 18% year-over-year to $5.7 billion. Nonetheless, it fell short of the consensus estimate of $6.1 billion, raising investor concerns. This miss was largely due to a 23% rise in the company’s depreciation and amortization expenses to $2.1 billion. As a result, FMG stock declined 1.23% in today’s trading session.
Fortescue is an Australian mining company focused on iron ore and green energy.
Fortescue Delivers Strong Operational Performance
Fortescue delivered robust operational performance in FY24, with iron ore shipments reaching 191.6 Mt (million tonnes). The FY24 iron ore shipments gained from the strength in the company’s hematite supply chain and the first shipment from the Iron Bridge project. Overall, Fortescue’s revenue increased 8% year-over-year to $18.2 billion.
The company’s underlying EBITDA (earnings before interest, tax, depreciation, and amortization) grew 7% to $10.7 billion, with an underlying EBITDA margin of 59%.
Fortescue Boosts FY24 Dividends
Fortescue announced a fully-franked final dividend of AU$0.89 per share, bringing the total FY24 dividend to AU$1.97 per share. This marked a 13% year-over-year growth in the FY24 total dividend and equates to a 70% payout of the company’s NPAT.
This aligns with Fortescue’s dividend policy, which targets a payout of 50% to 80% of the full-year underlying NPAT.
Are Fortescue Shares a Good Buy?
Following FMG’s results, analyst Lachlan Shaw from UBS reiterated a Sell rating on the stock, predicting a downside of 3.62%. Meanwhile, Paul McTaggart from Citi maintained a Hold rating on the stock with a growth forecast of 6%.
Analysts hold a bearish outlook on FMG stock, as reflected in its Moderate Sell rating. According to TipRanks, the stock has five Holds, six Sells, and one Buy recommendation. The average Fortescue share price target is AU$19.29, which is 5.14% above the current trading levels.
