This FTSE 100 dividend stock looks cheap. Time to pile in?

Could this be the start of a sustained recovery? Let’s take a closer look at today’s full-year numbers first.

Fall in profits Initial impressions aren’t great, with the firm announcing a 41% drop in net income to $3.4bn due to “non-cash impairments” at Mutanda — its large-scale copper and cobalt operation — and Mopani.

In contrast to peer BHP, which yesterday announced a reduction in net debt, Glencore’s debt burden also increased by 44% over the period to $14.7bn. That’s still within its desired range of between $10bn-16bn, but nevertheless higher than some analysts were expecting.

There were, however, a few positives. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 8% to $15.8bn and net income before significant items rose 5% to $5.8bn.

Commenting on today’s numbers, CEO Ivan Glasenberg stated that, despite a “challenging operating environment,” Glencore’s portfolio of assets had “continued to deliver overall competitive all-in unit costs” which, in turn, allowed it “to capitalise on healthy average commodity prices and generate attractive margins.”

Looking ahead, Glencore expects production in all commodities to be higher in 2019 than in the previous year. The company also stated that it would continue to invest in the low-carbon economy.

Buyer beware Like rival BHP Group, Glencore might appeal to Foolish investors wanting exposure to important metals without the risk associated with small-cap explorers and producers. It produces and markets more than 90 commodities, has offices in 50 countries, and owns roughly 150 assets around the world.

In addition to being a truly diversified business, last year’s rout means the shares look fairly cheap. Available for a little under 10 times forecast 2019 earnings before markets opened this morning, Glencore’s stock is less expensive than the aforementioned BHP, Rio Tinto (LON:RIO) and Anglo American (LON:AAL).

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Yielding 5%, there are worse places for income hunters to be investing their cash. Today’s recommended 20¢/share distribution is in line with the prior year and dividends are expected to be covered twice by expected profits in 2019. That’s a lot more comforting when compared to the state of affairs at other FTSE 100 income favorites.

News that the company has decided to initiate a new $2bn buyback programme that will run to the end of the year could also help improve sentiment. Interestingly, the firm will “look to top this up” so long as market conditions allow, supported by “a targeted $1bn of non-core asset disposals.”

All this, however, doesn’t necessarily make Glencore a great investment at the current time. Like all companies in the resources sector, the £42bn-cap’s fortunes are also dependent to an extent on things it can’t control.

With fears that global growth is slowing, there’s no guarantee the stock won’t continue to slide in value going forward. As such, anyone contemplating getting involved should be prepared to hold for the long term.

While I remain bullish on Glencore’s prospects over the next decade or so (thanks to the electric vehicle ‘revolution’), those with shorter time horizons may wish to consider less cyclical stocks for their portfolio.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2019