FTSE 100 international commodities big Glencore (LSE: GLEN) has seen its share price almost halve over 12 months.

I believe this has largely been the results of market uncertainty concerning the energy of China’s post-Covid financial system. Because the late Nineteen Nineties, it has been the world’s key purchaser of the commodities wanted to drive its progress. The current US imposition of 125% tariffs on the nation didn’t assist Glencore’s share price both.

Wanting forward, China’s financial progress outlook stays the important thing danger for the agency, in my opinion.

That mentioned, I consider these fears could also be overdone. I additionally suppose different elements make Glencore’s share price extraordinarily engaging on the present stage.

China is bucking market expectations

Q1 this 12 months noticed China’s gross home product (GDP) develop 5.4%. This was forward of the best market forecasts – for five%, which can also be Beijing’s official goal for 2025.

That mentioned, even a 4.5% GDP growth in China could be equal to including an financial system the scale of India’s to its personal each 4 years.

Constructive as nicely is the current chopping of US tariffs on China from 145% to 30%. On the identical time, China will reciprocate by chopping its tariffs on the US from 125% to 10%.

Though these reductions are initially for 90 days solely, they might nicely be prolonged I believe.

The agency’s enterprise outlook

Earnings progress is the important thing to rises in any agency’s share price and dividends over time.

Analysts forecast that Glencore’s earnings will improve a shocking 46% a 12 months to end-2027.

A lot of that is anticipated to return from the 11 July 2024 acquisition of steelmaking coal agency Elk Valley Assets (EVR).

The agency highlighted that steelmaking coal is the easiest way for it to create worth for its shareholders. It additionally believes this income can be utilized to fund alternatives in its transition metals enterprise, together with copper.

Based mostly on this earnings progress, analysts venture that Glencore will improve its dividends to eight.5p in 2025, 16.2p in 2026, and 25.4p in 2027.

And based mostly on the present £2.63 share price, these would generate respective yields of three.2%, 6.2%, and 9.7%.

Are the shares a discount?

The primary a part of my share price evaluation compares Glencore’s key valuations with these of its rivals.

On the price-to-sales ratio, the agency is backside of its competitor group – at 0.2 in opposition to their 2.3 common.

The companies are Anglo American at 1.3, Rio Tinto at 1.9, BHP at 2.4, and Antofagasta at 3.6.

So, Glencore appears to be like a serious discount on this measure.

The identical is true of its price-to-book ratio of 1.1 – additionally backside of the group, which averages 2.2.

The second a part of my evaluation establishes the place Glencore’s share price ought to be, based mostly on future money circulation forecasts.

Utilizing different analysts’ numbers and my very own, the ensuing discounted money circulation analysis reveals it’s 37% undervalued at its present £2.63.

Due to this fact, its truthful worth is £4.17, though shares can go down in addition to up.

Will I purchase the inventory?

I have already got shares in different commodity shares, so including one other would unbalance my portfolio.

Nonetheless, I consider Glencore’s projected robust earnings progress ought to push its share price and dividend a lot larger over time.

Consequently, I believe it’s nicely definitely worth the consideration of different buyers.