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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesAt the dated A$16.29 share price reported for 2 October 2026, Fortescue looks inexpensive on FY26 underlying earnings—but the case is less compelling if earnings fall as reported estimates suggest. The result is a potentially cyclical value, not an obvious bargain: the valuation depends heavily on iron-ore earnings holding up, while FY27 cost guidance is higher than FY26’s and the dividend varies with profits.
What does A$16.29 imply about Fortescue’s valuation?
The Motley Fool Australia reported Fortescue (ASX: FMG) at A$16.29 on 2 October 2026, close to its reported 52-week low of A$16.13. This is a dated price, not a live quote. Fortescue says share-price information in its investor centre is supplied by a third party and delayed by 20 minutes.
Using Fortescue’s official FY26 underlying earnings per share (EPS) of A$1.66, A$16.29 implies a trailing price-to-earnings ratio of about 9.8. That is a calculation from the dated share price and the company’s reported underlying EPS, not a valuation published by Fortescue. The Motley Fool article uses FY26 EPS of A$1.71, but the available evidence does not reconcile that figure with the company’s A$1.66 underlying EPS; the calculation here uses the official underlying figure.
| Earnings period | EPS used | Implied P/E at A$16.29 | Basis |
|---|---|---|---|
| FY26 | A$1.66 | About 9.8x | Fortescue-reported underlying EPS; calculation using the 2 October 2026 price. |
| FY27 | A$1.33 | About 12.2x | EPS estimate reported by The Motley Fool Australia on 2 October 2026; estimate provider and methodology not identified in the cited passage. |
| FY28 | A$1.21 | About 13.5x | EPS estimate reported by The Motley Fool Australia on 2 October 2026; estimate provider and methodology not identified in the cited passage. |
| FY29 | A$1.12 | About 14.5x | EPS estimate reported by The Motley Fool Australia on 2 October 2026; estimate provider and methodology not identified in the cited passage. |
Each multiple in the table holds the 2 October 2026 price constant and divides it by the stated EPS. The forward figures are reported estimates, not company guidance or independently verified forecasts. They indicate why the shares appear cheaper on trailing earnings than on those estimates, but do not establish what Fortescue is worth or predict its future share price. The dated article is available from The Motley Fool Australia.
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How strong were Fortescue’s FY26 earnings and finances?
Fortescue’s FY26 results show substantial cash generation alongside a difference between underlying and statutory profit. Underlying net profit after tax (NPAT) rose 3% to US$3.5 billion, while statutory NPAT fell 15% to US$2.9 billion. The company cited a US$525 million non-cash Iron Bridge impairment and a US$73 million compensation-claim expense among the explanations. That distinction matters: a P/E based on underlying EPS should not be read as though it were based on statutory earnings.
- FY26 underlying EBITDA was US$8.6 billion, up 9% year on year, with a 51% underlying EBITDA margin.
- Operating cash flow was US$6.8 billion and free cash flow was US$3.2 billion for FY26.
- At 30 June 2026, cash was US$5.1 billion and net debt was US$0.9 billion; gross debt to EBITDA was 0.7 times.
These are figures from Fortescue’s FY26 results announcement. The cash position and low reported leverage support financial resilience, but they cannot insulate earnings from weaker iron-ore prices or other operating changes.
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What could change earnings in FY27?
Fortescue shipped 201.3 million tonnes in FY26 and reported a Hematite realised price of US$91 per dry metric tonne. Hematite C1 unit cost was US$18.74 per wet metric tonne, 4% above FY25. For FY27, the company guided to shipments of 197–207 million tonnes and Hematite C1 unit costs of US$20.50–US$21.75 per wet metric tonne. Its shipment range includes 11–14 million tonnes from Iron Bridge on a 100% basis.
The shipment range is close to FY26 output, but the guided cost range is higher than the FY26 reported cost. The results announcement says FY27 guidance assumes an AUD:USD exchange rate of 0.70. Actual earnings will also depend on realised iron-ore prices, currency movements and execution, so tonnage guidance alone cannot determine whether the FY26 earnings base will persist.
Iron Bridge’s FY26 impairment is a reminder that projects can fall short of the value expected of them. Fortescue describes ongoing work to improve productivity, maintain core assets and invest in growth and decarbonisation; its growth and green-iron ambitions may create future value, but they are not yet an established replacement for the iron-ore earnings base. The FY26 investor and analyst call transcript includes management’s strategic perspective, which should be treated as a view rather than a guarantee of returns.
Is the dividend part of the value case?
Fortescue declared A$1.08 per share in fully franked FY26 dividends, equal to 65% of underlying NPAT. Its stated policy is to pay out 50–80% of full-year underlying NPAT, so the distribution is linked to earnings rather than set as a fixed amount.
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The Motley Fool Australia reported estimated dividends of A$0.85 for FY27, A$0.768 for FY28 and A$0.70 for FY29. As with its EPS estimates, the article does not identify the estimate provider or methodology in the cited passage. These figures are estimates, not promised payments. An investor considering Fortescue for income should account for the possibility that dividends change as profits change.
What are the main reasons the shares might not be cheap?
- Cyclical earnings: Fortescue’s valuation is exposed to iron-ore prices and demand. A low trailing P/E can reflect expectations that the earnings denominator will decline, rather than a market mispricing.
- Higher guided unit costs: FY27 Hematite C1 guidance is above the FY26 reported cost, which could weigh on margins if prices or other conditions do not offset it.
- Forecast uncertainty: The FY27–FY29 EPS and dividend figures above are secondary estimates with no identified provider or methodology in the cited passage. They are useful as scenarios to examine, not as assured outcomes.
- Project and investment risk: The Iron Bridge impairment demonstrates that investment does not guarantee the expected financial return. Expansion and decarbonisation projects also carry delivery and return uncertainty.
- Valuation limits: The available figures do not establish an intrinsic value, a live price, or a like-for-like peer valuation. They support a conditional assessment, not a precise fair-value target.
How to judge whether Fortescue suits your portfolio
The shares may look cheap to an investor who believes iron-ore earnings can remain strong enough to support profits and dividends despite higher guided costs. They may look less attractive to someone who expects the reported earnings decline to occur, wants a predictable dividend, or is seeking to reduce commodity exposure. The P/E figures are a starting point: the key question is whether future earnings can sustain a value close to the FY26 underlying result.
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Before acting, compare the dated price with a current quote and test your own assumptions about iron-ore prices, costs, currency and project execution. The figures here do not provide a like-for-like comparison with BHP or another miner, and they are not an individualized buy or sell recommendation.
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