$10,000 invested in Fortescue shares 12 months ago is now worth…

Owning Fortescue Ltd (ASX: FMG) shares has been a rough journey this year, with the ASX mining share going through a big dive.

As the chart below shows, the Fortescue share price has dropped by around 30% in the past year.

The ASX mining share's success is dependent on its production volumes, the iron ore price and Chinese customers buying the commodities.

The latest update highlighted several negative developments for the company, which may explain why investors are becoming more bearish on Fortescue's share price.

Weak quarterly update

It reported total iron ore shipments of 46.8mt in the first quarter of FY27, including 2.5mt from Iron Bridge. Those shipments fell 11% quarter-over-quarter and dropped 6% year-over-year.

However, iron ore sales of 42.9mt were below the shipments figure because of ongoing negotiations with China Mineral Resources Group (CMRG).

The hematite realised price, meaning the price it sold its iron ore for, was US$79.79 per dry metric tonne (dmt), representing a quarter-over-quarter and year-over-year reduction of 10%. But at the same time, the hematite C1 unit cost (the production costs) was US$21.98 per tonne, growing 13% quarter-over-quarter and 21% year-over-year, a majority of which was due to higher diesel prices.

Weaker revenue and higher costs are a painful combination for earnings.

The company said that its net debt increased to US$2.8 billion at 30 September 2026, compared to net debt of US$0.9 billion at 30 June 2026. This came after its US$1 billion FY26 final dividend and capital expenditure and investments of US$916 million.

Fortescue noted that FY27 guidance is iron ore shipments of between 197mt to 207mt, including 11mt to 14mt for Iron Bridge. The company said FY27 guidance is subject to negotiations with CMRG.

As China is the major buyer of iron ore, CMRG has significant power at the negotiating table and it's a cloud hanging over Fortescue shares.

What has happened to a $10,000 investment in Fortescue shares?

As I mentioned earlier, the Fortescue share price is down 31% over the past year.

That means a $10,000 investment in the ASX mining share 12 months ago is now worth approximately $6,900.

What could happen to the Fortescue share price from here?

Investment professionals now seem to indicate that the business is noticeably undervalued. According to CMC Invest, of five analyst ratings released since the company's FY27 first quarter update, the average price target was $16.19. That implies a possible rise of 13.4% over the next year.

The lower share price reflects worries about the CMRG negotiations and the iron ore price, but it now seems undervalued. However, it's not at the top of my watchlist due to the uncertainties and I'm looking at other opportunities.

The post $10,000 invested in Fortescue shares 12 months ago is now worth… appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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