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South32 (SOUHY) AI Stock Analysis

SOUHY

South32

(Other OTC:SOUHY)

Select Model
Rating:73.7Outperform
Price Target:$17.00â–²(10.61% Upside)
Action:upgraded
Date:08/28/26

The overall score reflects a combination of strong recent financial recovery, a robust balance sheet, and a positive, growth-oriented earnings call, balanced against the inherently cyclical and volatile nature of cash flows, a stretched technical setup after a strong price rally, and a rich valuation that assumes successful execution of the portfolio transition and growth projects.

Positive Factors
Sharp profitability reboundThe strong earnings rebound and expanded margins demonstrate materially improved operating performance after the prior downturn. If maintained, higher profitability should strengthen internal funding capacity, support capital returns, and provide a more durable earnings base across the next several quarters.
Negative Factors
Commodity-cycle earnings volatilitySouth32’s commodity exposure leaves earnings sensitive to market prices, realized volumes and operating conditions across alumina, coal, manganese and base metals. The sharp historical swings show that recent profitability may not be fully stable, creating ongoing uncertainty around margins, returns and cash generation.

South32 (SOUHY) vs. SPDR S&P 500 ETF (SPY)

-20%0%20%40%60%80%100%SOUHY+58.82%SPY+12.58%Dec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26Nov '26
Market Cap
$13.71B
Dividend Yield
3.05%
Average Volume (3M)
59.92K
Price to Earnings (P/E)
12.6
Beta (1Y)
1.26
Revenue Growth
1.08%
EPS Growth
319.45%
Country
US
Employees
6,867
Sector
Basic Materials
Sector Strength
61
Industry
Industrial Materials

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 Alumina,...

How the Company Makes Money

South32 primarily makes money by extracting, processing, and selling mined commodities under offtake and sales agreements to industrial customers and commodity traders, with revenue largely tied to benchmark commodity prices and volumes shipped. Key...

South32 Earnings Call Summary

Earnings Call Date:Aug 25, 2026(Q4-2026)|% Change Since:-15.31%|Next Earnings Date:Feb 14, 2024
Earnings Call SentimentPositive

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.

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

Financial performance is solid with a strong rebound in 2026 profitability, a conservatively levered balance sheet, and consistently positive operating cash flow, but the business is clearly cyclical and cash generation has been volatile across recent years.

Income Statement

78Positive

Balance Sheet

82Very Positive

Cash Flow

74Positive
Financial statement breakdown
BreakdownTTMJun 2026Jun 2025Jun 2024Jun 2023Jun 2022
Income Statement
Total Revenue5.83B5.82B5.78B5.48B5.65B9.27B
Gross Profit851.26M2.54B2.52B2.53B2.56B3.82B
EBITDA1.29B2.01B1.34B141.00M416.00M4.47B
Net Income1.07B1.09B213.00M-203.00M-173.00M2.67B
Balance Sheet
Total Assets14.49B14.49B13.73B14.24B14.56B16.34B
Cash, Cash Equivalents and Short-Term Investments2.13B2.13B1.68B842.00M1.26B2.37B
Total Debt1.85B1.85B1.63B1.57B1.74B1.83B
Total Liabilities4.78B4.78B4.87B5.27B5.19B5.56B
Stockholders Equity9.70B9.70B8.85B8.96B9.38B10.78B
Cash Flow
Free Cash Flow1.64B500.00M332.00M-2.00M303.00M2.48B
Operating Cash Flow1.64B1.63B1.33B1.12B1.19B3.07B
Investing Cash Flow-999.33M-997.00M-20.00M-1.11B-908.00M-2.10B
Financing Cash Flow-262.88M-261.00M-405.00M-417.00M-1.39B-215.00M

South32 Technical Analysis

Technical Analysis SentimentNegative
Last Price15.37

Price Trends

50DMA17.07Negative
100DMA16.15Negative
200DMA15.73Negative

Market Momentum

MACD-0.54Positive
RSI39.39Neutral
STOCH65.24Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOUHY, the sentiment is Negative. The current price of 15.37 is below the 20-day moving average (MA) of 15.98, below the 50-day MA of 17.07, and below the 200-day MA of 15.73, indicating a bearish trend. The MACD of -0.54 indicates Positive momentum. The RSI at 39.39 is Neutral, neither overbought nor oversold. The STOCH value of 65.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SOUHY.

South32 Peers Comparison

Overall Rating

UnderperformOutperform
Sector (61)

Financial Indicators

SOUHY against its peers
NameOverall RatingMarket CapP/E RatioROEDividend YieldRevenue GrowthEPS Growth
BHPBHP79Outperform$204.61B20.4819.41%4.30%15.12%9.37%
SOUHYSOUHY74Outperform$13.57B12.6411.30%3.05%1.08%319.45%
RIORIO62Neutral$141.00B11.1818.86%5.62%14.26%17.02%
Sector *61Neutral$10.43B7.12-0.05%2.87%2.86%-36.73%
NEXANEXA60Neutral$1.47B10.3912.97%1.19%23.37%―
VALEVALE56Neutral$45.46B71.301.93%9.38%10.51%-88.83%
GSMGSM53Neutral$721.28M-17.81-5.64%1.54%-8.54%61.49%

* Basic Materials Sector Average

Performance Comparison

0%50%100%150%200%SOUHYBHPGSMRIOVALENEXADec '25Jan '26Feb '26Mar '26Apr '26May '26Jun '26Jul '26Aug '26Sep '26Oct '26Nov '26
SOUHY and its peers over the selected period
Show on chartTickerCompany NamePriceChange% Change
SOUHYSouth3215.195.5056.69%
BHPBhp Group80.0727.8053.19%
GSMFerroglobe PLC3.84-0.59-13.42%
RIORio Tinto82.7318.0827.96%
VALEVale SA11.340.211.92%
NEXANexa Resources11.436.01110.77%
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.

Date of analysis: Aug 28, 2026