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South32
(Sydney:S32)
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Rating:68Neutral
Price Target:
AU$5.50
▲(7.21% Upside)
Action:Reiterated
Date:08/28/26
The score is driven primarily by improved FY2026 profitability and a conservative balance sheet, supported by strong technical uptrend signals. This is tempered by cyclical/uneven cash-flow quality and an expensive valuation (high P/E with modest yield). Earnings-call guidance is constructive with a visible growth pipeline, but meaningful safety, operational, and transaction-execution risks cap the upside.
Positive Factors
Profitability and Cash Flow Recovery
The sharp earnings and cash-flow recovery strengthens funding capacity for projects and shareholder returns. Although commodity prices influence results, improved operating performance and higher free cash flow provide a stronger base for the next several months.
Negative Factors
Cyclical Earnings and Uneven Cash Conversion
South32 remains highly exposed to commodity prices, production volumes and operating costs, creating substantial earnings volatility across the cycle. Uneven conversion of profit into free cash flow may constrain consistent investment and shareholder returns during weaker periods.
Read all positive and negative factors
Positive Factors
Negative Factors
Profitability and Cash Flow Recovery
The sharp earnings and cash-flow recovery strengthens funding capacity for projects and shareholder returns. Although commodity prices influence results, improved operating performance and higher free cash flow provide a stronger base for the next several months.
Read all positive factors
South32 (S32) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$23.05B
Dividend Yield1.78%
Average Volume (3M)16.80M
Price to Earnings (P/E)15.7
Beta (1Y)1.36
Revenue Growth-3.88%
EPS Growth312.74%
CountryAU
Employees6,867
SectorBasic Materials
Sector Strength58
IndustryIndustrial Materials
Share Statistics
EPS (TTM)0.24
Shares Outstanding4,486,486,000
10 Day Avg. Volume14,252,705
30 Day Avg. Volume16,795,707
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)1.25
Price to Sales (P/S)2.08
P/FCF Ratio24.21
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$5.21Price Target Upside1.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)0.26
Revenue Forecast (FY)AU$6.32B
South32 Business Overview & Revenue Model
Company Description
South32 Limited functions as a diversified metals and mining company, conducting operations across Australia, Southern Africa, North America, and South America. The firm manages its extensive activities through various segments, including Worsley ...
How the Company Makes Money
South32 makes money by producing commodities from its operated assets (and, in some cases, through interests in jointly owned operations) and selling those commodities to customers at prevailing market prices, typically under a mix of spot sales, ...
South32 Earnings Call Summary
Earnings Call Date:Aug 26, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Feb 18, 2027
Earnings Call Sentiment Positive
The call delivered a predominantly positive commercial and financial message: strong earnings (+28% EBITDA, +55% underlying earnings), improved free cash flow, a clear growth pipeline (55% expected production growth from approved/under-construction projects), and a transformational sale to Alcoa that repositions the company toward higher-margin base metals. These positives are tempered by a serious safety failure (fatality), operational uncertainties at GEMCO related to water and weather, grade variability at Cannington due to stockpile processing, and near-term balance sheet pressure after returns and Hermosa investment. Transaction execution risk and a noted lockbox variance introduce additional near-term uncertainty. Overall, the highlights materially outweigh the lowlights while acknowledging significant safety and operational issues that require attention.Positive Updates
Strong Earnings and EBITDA Growth
Group underlying EBITDA increased 28% to $2.5 billion and underlying earnings rose 55% to $1.0 billion, driven by base metals operating performance and commodity price tailwinds.
Negative Updates
Fatal Safety Incident at Worsley Alumina
A workplace fatality occurred in March 2026 (the death of colleague Simon Mukwarami at Worsley), with management acknowledging the company did not meet its safety expectations and committing to enhanced controls for working at heights.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong Earnings and EBITDA Growth
Group underlying EBITDA increased 28% to $2.5 billion and underlying earnings rose 55% to $1.0 billion, driven by base metals operating performance and commodity price tailwinds.
Read all positive updates
Company Guidance
Management guided material base‑metals growth and disciplined capital returns: projects under construction or approved are expected to deliver ~55% production growth in copper and zinc; Sierra Gorda Ore Reserves rose 61% to 1.1 billion tonnes and reserve life was extended by ~5 years to ~19 years (supporting +5% production in FY27 and +2% in FY28, with a fourth grinding line to add ~30% from 2031); Hermosa (Taylor) is on track (ventilation shaft nearing bottom, primary/secondary mills and flotation cells installed, 5 of 6 substations in place) with project contingency intact after ~$700m invested; Cannington processed ~200,000 t of low‑grade stockpiles last year, plant potential up to ~3 Mtpa with current guidance ~2.1 Mtpa and stockpile:underground grade ratio ~2–2.5:1. FY26 financial guidance/results: underlying EBITDA +28% to $2.5bn, underlying earnings +55% to $1.0bn, group free cash flow +$352m to $610m, net cash $283m after returning $327m to shareholders; Board declared a fully franked dividend of $0.054/sh ($242m), extended capital returns to Sep‑2027 with $209m remaining, sale of aluminium assets EV up to $5.6bn (rehab provisions >$1bn) expected to complete H2 FY27, lockbox ~$100m at 30 June, franking credits ~$1.6bn, and a 40% underlying earnings payout policy remains in place until deal completion.South32 Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
76
Positive
Cash Flow
58
Neutral
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.82B | 5.78B | 5.48B | 5.65B | 9.27B |
| Gross Profit | 2.54B | 2.52B | 1.86B | 1.94B | 5.46B |
| EBITDA | 2.01B | 1.34B | 141.00M | 416.00M | 4.47B |
| Net Income | 1.09B | 213.00M | -203.00M | -173.00M | 2.67B |
Balance Sheet | |||||
| Total Assets | 14.49B | 13.73B | 14.24B | 14.56B | 16.34B |
| Cash, Cash Equivalents and Short-Term Investments | 2.13B | 1.68B | 842.00M | 1.26B | 2.37B |
| Total Debt | 1.85B | 1.63B | 1.57B | 1.74B | 1.83B |
| Total Liabilities | 4.78B | 4.87B | 5.27B | 5.19B | 5.56B |
| Stockholders Equity | 9.70B | 8.85B | 8.96B | 9.38B | 10.78B |
Cash Flow | |||||
| Free Cash Flow | 500.00M | 332.00M | -2.00M | 303.00M | 2.48B |
| Operating Cash Flow | 1.63B | 1.33B | 1.12B | 1.19B | 3.07B |
| Investing Cash Flow | -997.00M | -20.00M | -1.11B | -908.00M | -2.10B |
| Financing Cash Flow | -261.00M | -405.00M | -417.00M | -1.39B | -215.00M |
South32 Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | AU$23.05B | 15.74 | 11.30% | 2.67% | -3.88% | 312.74% | |
67 Neutral | AU$16.74B | 31.43 | 13.75% | ― | 151.97% | ― | |
66 Neutral | AU$12.24B | 11.42 | 26.29% | ― | 44.48% | ― | |
65 Neutral | AU$6.29B | 42.28 | 6.76% | ― | -11.58% | ― | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
55 Neutral | AU$3.56B | -144.90 | -0.86% | ― | -3.18% | 88.11% | |
54 Neutral | AU$2.88B | -7.10 | -19.70% | 0.84% | -20.11% | -312.34% |
* Basic Materials Sector Average
AU:S32
South32
5.21
2.66
103.99%
AU:PLS
PLS Group
5.20
2.91
127.27%
AU:ILU
Iluka Resources Limited
6.74
0.47
7.44%
AU:IGO
IGO
8.41
3.64
76.31%
AU:MIN
Mineral Resources Limited
63.33
26.54
72.14%
AU:NIC
Nickel Mines Ltd.
0.83
0.13
18.57%
South32 Corporate Events
South32 Director Sells Shares to Cover Tax on Incentive Grant
Aug 28, 2026
South32 has disclosed a change in the securities held by director Matthew Daley, who reduced his holding of ordinary fully paid shares held via the company’s employee share plan. The notice details that 113,924 shares were sold on market at ...
South32 Director Stephen Pearce Increases Indirect Shareholding
Aug 28, 2026
South32 has disclosed a change in the shareholdings of director Stephen Pearce, who increased his indirect interest in the company through an on-market purchase on the Australian Securities Exchange. Pearce acquired 40,000 additional ordinary full...
South32 details performance and ESG progress in 2026 annual report
Aug 26, 2026
South32 has released its 2026 Annual Report, outlining the group’s operations, activities and financial performance for the year to 30 June 2026, along with its financial position at year end. The report also details progress against sustain...
South32 Underscores Non‑IFRS Metrics and JORC‑Compliant Resource Base in 2026 Results
Aug 26, 2026
South32 has released its 2026 full‑year financial results presentation alongside its annual reporting, emphasising the use of non‑IFRS performance measures such as underlying earnings, EBIT, EBITDA, operating margins and free cash flow...
South32 Extends On-Market Share Buy-Back Program
Aug 26, 2026
South32 Limited has updated its capital management program, extending the end date of its on-market share buy-back of ordinary fully paid S32 securities. The revised timetable builds on a buy-back first notified in August 2024 and previously amend...
South32 Declares Semi-Annual Dividend of USD 0.054 Per Share
Aug 26, 2026
South32 Limited has declared a semi-annual dividend on its ordinary fully paid shares, reinforcing its established pattern of returning cash to investors. The distribution is set at USD 0.054 per share for the six-month period ended 30 June 2026, ...
South32 profit surges as portfolio reshaping lifts FY26 earnings
Aug 26, 2026
South32 has reported its financial results for the year ended 30 June 2026, posting revenue from continuing operations of US$5,816 million, up 1% year on year, and profit after tax attributable to members of US$1,087 million, a 410% increase. Unde...
South32 boosts Sierra Gorda reserves 61% and extends Chile copper mine life
Aug 24, 2026
South32 has significantly upgraded the Ore Reserve and Mineral Resource estimates at its Sierra Gorda copper mine in Chile following extensive infill drilling between 2023 and 2025, completing about 85,000 metres across 200 drillholes. The Ore Res...
South32 Lapses 868,931 Conditional Rights, Tightens Future Capital Base
Jul 9, 2026
South32 Limited has reported the lapse of 868,931 conditional rights to securities under the ASX code S32AA, after the conditions attached to these rights were not met or became incapable of being satisfied by 30 June 2026. The cessation of these ...
South32 issues 203,927 new shares from converted unquoted securities
Jul 9, 2026
South32 Limited has notified the market of the issue of 203,927 fully paid ordinary shares following the conversion or exercise of previously unquoted equity securities. The new shares, issued on 30 June 2026, modestly increase the company’s...
South32 Issues New Unquoted Rights Under Employee Incentive Scheme
Jul 9, 2026
South32 Limited has notified the market of the issue of 116,115 unquoted rights securities under its employee incentive scheme, effective 30 June 2026. The new rights, which are not intended to be quoted on the ASX, reflect the company’s ong...
South32 Discloses Initial Shareholdings of Incoming Director Matthew Daley
Jul 1, 2026
South32 has disclosed the initial securities interests of newly appointed director Matthew Daley, who will join the board on 1 July 2026, in line with regulatory requirements. Daley holds 3,197,143 performance rights granted under the South32 Equi...
South32 Details Final Director Interest Notice for Departing CEO Graham Kerr
Jul 1, 2026
South32 has disclosed a final director’s interest notice for outgoing chief executive and managing director Graham Kerr, who ceased to be a director on 30 June 2026. The filing details his remaining holdings in the company, including ordinar...
Alcoa to Buy South32 Aluminum Assets in $4.1 Billion Upstream Expansion
Jun 30, 2026
Alcoa has agreed to acquire South32’s bauxite, alumina, and aluminum assets in a cash-and-stock deal valued at about $4.1 billion, implying an enterprise value of roughly $4.7 billion including net debt. The transaction will add low-cost, gl...
South32 greenlights high-return expansion at Chile’s Sierra Gorda copper mine
Jun 30, 2026
South32’s Sierra Gorda joint venture in northern Chile has approved a brownfield expansion to add a fourth grinding line, following a feasibility study that confirmed attractive returns from the project. The investment will increase processi...
South32 to Exit Aluminium Chain as It Sharpens Focus on Base Metals
Jun 30, 2026
South32 has outlined plans to sell its aluminium value chain assets as it reshapes itself into an upstream base metals-focused company, signalling a strategic shift toward growth in projects such as Cannington and the Hermosa development. The rele...
South32 Sells Aluminium Assets to Alcoa in US$5.6bn Pivot to Base Metals
Jun 30, 2026
South32 has agreed to sell its aluminium value chain assets, including major interests in Worsley Alumina, Hillside Aluminium and Brazilian bauxite and refining operations, to Alcoa for an implied enterprise value of up to US$5.6 billion, with Alc...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.