The average target price of RIO.V is 1.9 and suggests 74% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 2.5. This translates into 131% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 1.4. This suggests 30% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Rio2 Limited engages in the exploration, development, and mining of mineral properties in Canada, Peru, and Chile. Its flagship project is the Fenix Gold Project covering an area of approximately 16,050 hectares located in Chile. The company was incorporated in 1990 and is headquartered in Vancouver, Canada.

Canada

Rio2 Limited

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

RIO.V reported revenue of USD 0mn in the last 12 months, down 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 39% from FY23 to USD -0.03. Market expects EPS to reach USD -0.03 in FY25.

The stock has been growing steadily in the past six months, adding 64% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 51ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

In the last 12 months, the return on capital employed (RoCE) grew to 0.0%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 0.0% in the last 12 months, an increase from -2.2% in FY22. 

Rio2 Limited reported a return on equity (RoE) of 0.0% in the last 12 months, up from -2.7% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.3 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

RIO.V has poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, inadequate interest coverage, and poor cash flow generation. We note an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, RIO.V is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, RIO.V is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is slightly overvalued relative to its peers. In particular, the stock is 'expensive' on EV/EBITDA. 

Rio2 Limited

CA$ 1.05

3

Rio2 Limited

CA$ 1.05

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 1.05

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