Glencore (LON: GLEN) is a Swiss mining company founded in 1974. It initially focused on marketing ferrous and non-ferrous metals and minerals, crude oil, and oil products. Since then, the company has become a behemoth in the global commodity trading and mining industry.
Glencore operates with two segments, its industrial and marketing divisions. Its industrial segment covers the metals and energy markets, producing numerous commodities from over 60 assets. In marketing, it moves “commodities from where they are plentiful to where they are needed.”
Glencore’s reach extends to over 35 countries and over 60 commodities. It has 150,000 employees and contractors. The company’s shares are listed on the London Stock Exchange under the ticker GLEN. It is also a constituent of the FTSE 100. Glencore also has a secondary listing on the Johannesburg Stock Exchange (JSE).
YOUR CAPITAL IS AT RISK
EPS and Revenue Breakdown 2020-2023
| Glencore | Annual EPS | Annual Revenue |
|---|---|---|
| 2020 | $-0.14 | $142.34 billion |
| 2021 | $0.38 | $203.75 billion |
| 2022 | $1.33 | $255.98 billion |
| 2023 | $0.34 | $217.83 billion |
Mining Industry Comparison
YOUR CAPITAL IS AT RISK
Share Price & Dividends
The Glencore share price surged in 2021 and 2022, climbing to well over 500p per share. However, 2023 saw the stock pullback. While it has begun to recover over the last couple of months (July 2024), there is still some way to go before it approaches potential new all-time highs. In February, the stock declined on the back of an earnings and dividend drop, but shortly after, it staged a recovery.
Glencore does pay dividends, with its current dividend yield at 2.12%.
Glencore Share Price Forecast
The majority of analysts are bullish on Glencore, with six out of ten assigning the stock a Buy rating and four viewing it as a Hold, according to data compiled by TipRanks. However, the average price target is currently 472.22p, suggesting a potential more than 2% downside from current levels.
In March, Deutsche Bank upgraded Glencore to Buy from Hold with a 540p price target. The firm highlighted the fact that, at the time, GLEN shares were down over 15% year-to-date. However, the bank said it expected the market focus to shift towards the impending completion of the acquisition of Teck’s steelmaking coal business, as well as the decision on whether to proceed with the CoalCo demerger. Deutsche Bank added that there is a growing possibility the planned separation is deferred. If so, they argue that Glencore will “again become the leading cash generator in the sector.”
Meanwhile, in January, Glencore was initiated with a Buy rating at Goldman Sachs. The investment bank assigned the stock a 530p price target, stating that the company and Rio Tinto offer the strongest balance sheets alongside strong cash flows with the most valuation upside in the European metals and mining sector. Furthermore, Goldman Sachs said it expected Glencore to continue to gather cash from its industrial and marketing segments to fund its “attractive” brownfield copper growth portfolio.
Our View: Glencore is certainly a giant in its industry, and the recent move higher following a pullback makes it an attractive stock for momentum investors. In addition, income-focused investors will look towards its dividend payments as a positive. However, any potential investors should consider the risks and possibility of share price volatility before investing.
Suitability
Any company you invest in should be carefully researched. However, it is key to also assess whether the stock aligns with your own preferences and traits. Here are some aspects to consider:
Glencore’s profitability and share price are heavily tied to the prices of the commodities it trades and produces. Be prepared for a potentially volatile stock price that can fluctuate with global economic conditions. If your risk tolerance can handle some degree of volatility, Glencore may be a stock to assess further.
Research the future demand for the commodities Glencore deals in. A strong long-term view is important, as commodity cycles can experience booms and busts. Glencore offers a way to gain exposure to a diversified basket of commodities through a single stock. Investors with a long-term horizon can potentially weather the ups and downs of commodity cycles.
Glencore pays dividends. While the current dividend yield is not spectacular, the stock may suit investors looking for a steady dividend income.
