Erste Group has upgraded Rio Tinto Plc from Hold to Buy, citing the mining company's comparatively high return on common equity as a central justification for the more positive stance. According to InvestingPro data referenced by the research house, Rio Tinto's return on common equity is 18%, a level that underpins the analyst's upgraded view.
The firm also flagged valuation and income metrics as complementary reasons for the change. Rio Tinto currently trades at a price-to-earnings ratio of 14.18 and offers a dividend yield of 3.38%, which the analyst described as "very high." The company has sustained dividend payments for 34 consecutive years, a record the research house noted when explaining the upgrade.
Erste Group's analyst Hans Engel expects stronger sales momentum in 2026 compared with the prior year. He identified rising copper production in Mongolia as making an "important contribution" to that anticipated improvement. The note also observed that increases in copper output should produce proportional increases in silver production, a dynamic the firm cited as further support for Rio Tinto's growth outlook.
Rio Tinto operates on a global scale across multiple commodity lines, including iron ore, aluminum, copper and diamonds. The company reported that it achieved its 2025 production guidance across all commodities. Specific operational highlights included copper production of 883,000 tonnes, which exceeded the company's guidance range.
Operational metrics also showed an 8% year-on-year increase in copper equivalent production, alongside shipments that rose by 5%. Rio Tinto registered record quarterly iron ore output in the Pilbara region of Western Australia, and it completed the first shipment from the Simandou project in Guinea.
On the corporate strategy front, Rio Tinto confirmed it has held preliminary merger talks with Glencore, discussions that could potentially lead to an all-share merger. In sustainability and technology developments, the company energized a 25-megawatt solar plant at its Kennecott copper site in Utah, a project expected to materially lower the site's Scope 2 emissions. Rio Tinto also announced a collaboration with Amazon Web Services to deploy its Nuton bioleaching technology at the Johnson Camp mine in Arizona.
Market analysts have reacted to the company's recent performance. CLSA raised its price target on Rio Tinto to AUD165 and maintained an Outperform rating following a strong fourth-quarter showing.
Context and implications
The upgrade by Erste Group rests on three pillars cited by the firm: an above-peer return on equity, valuation metrics that the research house judged attractive, and a high dividend yield backed by a long track record of payouts. Operationally, the company’s outperformance against its guidance and expanding copper volumes underpin the analyst’s positive view toward sales in 2026.