On Wednesday, Citi reaffirmed its Buy rating on Anglo American (JO:AGLJ) PLC (AAL:LN) (OTC: NGLOY) with a steady price target of GBP26.00. The firm's analysis suggests a divergence from the market's expectations regarding the mining company’s full-year 2023 financial results, which are set to be released on February 22, 2023.
The analyst from Citi has projected that Anglo American's free cash flow (FCF) for the full year 2023 will be significantly lower than the market consensus. According to their estimates, the FCF will stand at a negative $1,360 million, which contrasts sharply with the consensus expectation of a modestly positive FCF of $462 million.
The difference in FCF estimates is attributed to a substantial working capital build in specific segments of Anglo American's operations. Citi's analyst believes that the consensus underestimates the extent of the working capital accumulation in the company’s diamond and platinum group metals (PGMs) businesses.
In addition to free cash flow, Citi also anticipates a discrepancy in dividend payouts. The firm expects Anglo American's dividend per share (DPS) to be approximately 5% lower than the market consensus for the year.
Investors and stakeholders of Anglo American PLC are likely to watch closely as the company approaches the date for the announcement of its full-year 2023 results. The anticipation builds on whether the actual financial outcomes will align with Citi's cautious stance or the more optimistic market consensus.
InvestingPro Insights
As Anglo American PLC (OTC: NGLOY) gears up to release its full-year 2023 financial results, investors are evaluating the company's performance and prospects. According to InvestingPro data, Anglo American boasts a market capitalization of $26.12 billion and a P/E ratio that stands at a competitive 12.45, reflecting investor confidence in its earnings capacity. Notably, the company's P/E ratio adjusted for the last twelve months as of Q2 2023 is even lower, at 8.85, suggesting that the stock may be undervalued relative to its earnings.
InvestingPro Tips highlight that management at Anglo American has been actively engaged in share buybacks, which can signal confidence in the company's future and often support the stock price. Furthermore, Anglo American is recognized for paying a significant dividend to shareholders, with a current dividend yield of 5.53%, a compelling factor for income-focused investors. This aligns with Citi's focus on the company's dividend payouts, though it's worth noting that the dividend growth over the last twelve months has seen a decrease of 56.74%.
As a prominent player in the Metals & Mining industry, Anglo American's financial health is critical. The company has demonstrated its ability to cover interest payments comfortably with its cash flows, and its liquid assets exceed short-term obligations, which is reassuring for stakeholders concerned about the company's liquidity and financial resilience.
For those interested in a deeper analysis of Anglo American PLC, additional InvestingPro Tips can be found at https://www.investing.com/pro/NGLOY. These include insights into the company's trading position near its 52-week low, profitability predictions for the year, and its performance over the last twelve months. In total, there are 7 additional InvestingPro Tips available for Anglo American, which can provide a more comprehensive understanding of the company's financial health and market position.
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