Fortescue Ltd (FMG.AX) stock analysis

In our weekly check, Fortescue Ltd is graded C (A to F). Of 25 checks on debt, profit, cash flow and trend: 14 pass, warnings: 6, red flags: 5.

About Fortescue Ltd

Fortescue Ltd is a Basic Materials company (Industrial Materials) based in Australia, listed on ASX as FMG.AX.

What our checks show for FMG.AX

Red flags

• The net margin fell by 18.7 points over 5 years, to 16.9%: the company keeps less of each sale as profit.
• The gross margin fell by 15.9 points, to 40.1%: costs are rising faster than prices.
• Analysts expect revenue to shrink about 4.7% a year.
• The stock has fallen as much as 90% from a peak. Would you have held through that?
• Recovering from its deepest fall took about 11.3 years.

Warning signs

• Analysts expect earnings per share to shrink about 9.4% a year.
• Analysts expect the net margin to shrink by 1.9 points from today's 16.9%.
• Revenue grew only 0.2% a year over the last 3 years.
• Earnings per share fell 14.9% a year over the last 3 years.
• Net profit fell 15.7% a year over the last 3 years.
• The dividend takes 90% of profit: little cushion if profit falls.

Strengths

• Net debt is only 0.1x a year of EBITDA: the balance sheet has room.
• Operating profit covers interest 13.9 times over.
• Operating cash flow is 2.42x net profit: the profit arrives as real cash.
• Free cash flow is 21.3% of revenue: cash for dividends, buybacks or growth.
• The price is 10.8 times earnings (P/E), reasonable for its growth.
• A large company: market value $30.92 billion.

Similar companies

AAL.L · VALE · GLEN.L · S32.AX · RIO · BHP

Questions

What grade does Fortescue Ltd (FMG.AX) have?

In our weekly check, Fortescue Ltd is graded C (A to F). Of 25 checks on debt, profit, cash flow and trend: 14 pass, warnings: 6, red flags: 5. The grade is a risk check, not a buy or sell recommendation.

What are the main risks of FMG.AX stock?

This week's biggest flags for Fortescue Ltd: Margins falling, Gross margin falling, Weak revenue forecast. In total 11 of 25 checks show a warning or a red flag.

What does Fortescue Ltd do?

Fortescue Ltd is a Basic Materials company (Industrial Materials) based in Australia, listed on ASX as FMG.AX.

The grade is a risk check, not a price forecast, and not investment advice. In our 10-year test (S&P 500, 2016-2026), stocks we graded A or B fell more than 30% 2-3 times less often than D or F, without a lower average return.

Updated 2026-10-24

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