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South32
(OTC:SOUHY)
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Rating:70Outperform
Price Target:
$20.50
▲(11.66% Upside)
Action:Upgraded
Date:08/28/26
The score is driven primarily by the strong financial rebound and solid balance sheet, reinforced by positive earnings-call guidance and a constructive technical trend. These positives are tempered by an expensive valuation (high P/E with modest yield) and ongoing cycle/execution risks highlighted in recent updates.
Positive Factors
Earnings and margin recovery
The sharp recovery in earnings and operating margins shows improved profitability across the portfolio. Sustained margins would strengthen resilience and provide more internal funding for growth, although commodity prices remain an important variable.
Negative Factors
Commodity-cycle earnings volatility
South32 remains exposed to prices for aluminium, manganese, coal, nickel, zinc, lead and silver. Commodity downturns can compress margins, reduce earnings and weaken cash generation even when production and asset execution remain sound.
Read all positive and negative factors
Positive Factors
Negative Factors
Earnings and margin recovery
The sharp recovery in earnings and operating margins shows improved profitability across the portfolio. Sustained margins would strengthen resilience and provide more internal funding for growth, although commodity prices remain an important variable.
Read all positive factors
South32 (SOUHY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$16.61B
Dividend Yield1.76%
Average Volume (3M)18.47K
Price to Earnings (P/E)15.8
Beta (1Y)1.27
Revenue Growth1.08%
EPS Growth319.45%
CountryUS
Employees6,867
SectorBasic Materials
Sector Strength58
IndustryIndustrial Materials
Share Statistics
EPS (TTM)1.19
Shares Outstanding897,297,100
10 Day Avg. Volume32,609
30 Day Avg. Volume18,474
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)1.25
Price to Sales (P/S)2.09
P/FCF Ratio24.26
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.29
Revenue Forecast (FY)$6.39B
South32 Business Overview & Revenue Model
Company Description
South32 Limited operates as a global, diversified natural resources company with significant mining and metals operations across Australia, Southern Africa, North America, and South America. Its portfolio includes key assets such as Worsley Alumin...
How the Company Makes Money
South32 makes money by extracting, processing, and selling mined commodities and refined metals to industrial customers and commodity traders, with revenue largely determined by sales volumes and prevailing market prices for each product. Its core...
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 presented a predominantly positive operational and financial picture: strong EBITDA (+28%) and underlying earnings (+55%), improved free cash flow (+$352M to $610M), disciplined capital returns, and a transformational sale of aluminium assets that repositions the company toward higher‑margin base metals growth. Project execution updates (Hermosa, Sierra Gorda, Taylor) and a deep growth pipeline support further upside. Key negatives include a workplace fatality at Worsley (material reputational and safety concern), operational uncertainty at GEMCO due to water/dewatering risks and limited life‑of‑mine under current plans (~6 years), grade dilution risks from Cannington stockpile processing, and execution/timing risk around the Alcoa transaction and lockbox cash variance. On balance, highlights materially outweigh the lowlights given the scale of financial improvements and growth projects.Positive Updates
Strong EBITDA and Earnings Growth
Group underlying EBITDA increased 28% to $2.5 billion, and underlying earnings rose 55% to $1.0 billion, reflecting strong operating performance in base metals and benefit from commodity price tailwinds.
Negative Updates
Fatal Safety Incident at Worsley Alumina
A workplace fatality (Simon Mukwarami) in March 2026 at Worsley Alumina marked a major safety failure; management acknowledged not meeting expectations and outlined additional controls and design changes to reduce working-at-height risks.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong EBITDA and Earnings Growth
Group underlying EBITDA increased 28% to $2.5 billion, and underlying earnings rose 55% to $1.0 billion, reflecting strong operating performance in base metals and benefit from commodity price tailwinds.
Read all positive updates
Company Guidance
The call guided that South32’s repositioning to base metals underpins a strong FY26 result and a growth-focused FY27 outlook: group underlying EBITDA rose 28% to $2.5bn and underlying earnings rose 55% to $1.0bn, group free cash flow increased by $352m to $610m after investing $700m in Hermosa, net cash was $283m after returning $327m to shareholders, and the Board declared a fully franked dividend of $0.054/share ($242m) while extending the capital management program to September 2027 with $209m still to return; the aluminium value chain sale to Alcoa is for up to $5.6bn EV (plus >$1bn rehabilitation provisions) with expected completion H2 FY27 and ~$100m was in the lockbox at 30 June. Management expects 55% production growth from projects under construction or approved, highlighted by Sierra Gorda’s 61% Ore Reserve increase to 1.1bn tonnes and ~5‑year reserve life extension to ~19 years (Sierra Gorda +5% production in FY27 and +2% in FY28, and a fourth grinding line to add ~30% from 2031), Hermosa/Taylor advancing with ventilation shaft nearing bottom, 5 of 6 substations and mills/flotation cells installed and contingency intact, Cannington guidance ~2.1Mt (plant capable up to 3Mt) with ~200kt of low‑grade stockpiles processed last year (stockpile:ore grade ratio ~2–2.5:1), Ambler fieldwork underway, GEMCO modeled life to 2033 (~6 years), and a 40% payout of underlying earnings (including aluminium earnings) will apply until completion, with $1.6bn of franking credits available for distribution.South32 Financial Statement Overview
Summary
Income Statement
71
Positive
Balance Sheet
78
Positive
Cash Flow
64
Positive
| 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 | 2.53B | 2.56B | 3.82B |
| 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 Technical Analysis
Positive
18.36
Price Trends
16.20
Positive
15.90
Positive
14.85
Positive
Market Momentum
0.67
Positive
63.80
Neutral
73.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOUHY, the sentiment is Positive. The current price of 18.36 is above the 20-day moving average (MA) of 18.01, above the 50-day MA of 16.20, and above the 200-day MA of 14.85, indicating a bullish trend. The MACD of 0.67 indicates Positive momentum. The RSI at 63.80 is Neutral, neither overbought nor oversold. The STOCH value of 73.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SOUHY.
South32 Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $231.05B | 23.82 | 19.41% | 3.74% | 15.12% | 9.37% | |
70 Outperform | $16.61B | 15.80 | 11.30% | 1.76% | 1.08% | 319.45% | |
63 Neutral | $177.44B | 14.11 | 18.86% | 4.48% | 14.26% | 17.02% | |
63 Neutral | $1.83B | 6.76 | 25.68% | 0.96% | 23.37% | ― | |
62 Neutral | $64.41B | 31.07 | 5.76% | 6.84% | 12.55% | -60.45% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
59 Neutral | $872.64M | -20.96 | -5.64% | 1.28% | -8.54% | 61.49% |
* Basic Materials Sector Average
SOUHY
South32
18.85
10.46
124.68%
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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.