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The Glencore (LSE: GLEN) share price has been a horror show. At least it has been for me. Bargain hunters might see a thrilling buying opportunity instead. Analysts certainly do.
I bought the FTSE 100 mining giant in 2023 when it was deeply unloved. Little has changed since. The share price is down 37% over the past year. Still, longer-term holders will be a little more upbeat. Glencore shares are up around 65% over five years.
Cyclical industries like mining often suffer big swings. When demand and prices are high, profits surge. When the economy slows and demand falters, everything plunges.
FTSE 100 recovery stock
China lies at the heart of the current slump. After gobbling up raw materials for years, its property and construction sectors over-reached. Now signs are emerging of a possible rebound. Factory activity and exports are improving, exports are picking up, stocks have climbed and government stimulus is in play.
There’s even an uneasy truce in the US-China trade war. However, consumer demand remains weak, and deflation threatens margins. I remain unconvinced.
Digging into 2024 results, on 19 February Glencore reported adjusted EBITDA down 16% to $14.36bn and operating profit plunging 33% to $7bn. CEO Gary Nagle even floated the fashionable remedy of shifting the group’s primary listing to New York to squeeze out a better valuation.
He also highlighted positive cash returns: $1.2bn in dividends plus a $1bn top-up share buyback, and “healthy” free cash flow of $4.8 bn at current commodity prices.
Dividends and buybacks
In April, Q1 results revealed more weakness. Copper output plunged, although cobalt, coal and zinc production increased. The board flagged up macroeconomic uncertainty, particularly US tariffs, but said commodities trade routes remained largely stable.
Analysts remain upbeat. Surprisingly so, in my view. But then I’m a bit down on the whole enterprise at the moment, with Glencore stinking out my largely successful Self-Invested Personal Pension (SIPP).
Brokers have produced a median 12-month price target of 379p. That’s a bullish 31% rise from today (with any dividends on top). Of 19 analysts, 15 rate Glencore as a Strong Buy, two more say Buy, and none rate it a Sell. Another surprise.
Forecasts suggest earnings per share will swing from a 13-cent loss in 2024 to a 20-cent profit in 2025. They’ll then rise to 33 cents in 2026 and 44 cents in 2027. We’ll see.
Cyclical upswing
And what do I think? All that optimism is confusing me. I don’t even trust forecasts that the yield will rise from 2.99% this year to just over 5% in 2026. Dividend coverage has been around 1.5 times lately, which is okay but not great.
I still hold Glencore and plan to stay patient. But I think the mining sector needs a serious jump in global demand to justify these numbers. Last month, the OECD cut its global growth forecasts to 2.9% for 2025 and 2026. In 2024, growth came in at 3.3%, so that’s quite a dip.
Let’s hope I’m wrong and Glencore is primed for recovery. I still think it would take a brave investor to consider buying Glencore today, but they say fortune favours the brave. We’ll see.
