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Required knowledge for VALE (VALE) Investors

It's been a great afternoon session for VALE investors, who saw their shares rise 1.4% to a price of $10.4 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

VALE Is Potentially Undervalued and Its Shares Are on Sale:

Vale S.A., together with its subsidiaries, produces iron ore and nickel in Asia, the Americas, Europe, and internationally. The company belongs to the Basic Materials sector, which has an average price to earnings (P/E) ratio of 20.25 and an average price to book (P/B) ratio of 2.31. In contrast, VALE has a trailing 12 month P/E ratio of 8.5 and a P/B ratio of 0.21.

VALE has moved 2.6% over the last year compared to 18.5% for the S&P 500 — a difference of -15.9%. VALE has a 52 week high of $12.05 and a 52 week low of $8.06.

Exceptional EPS Growth but an Average Current Ratio:

2019 2020 2021 2022 2023 2024
Revenue (M) $36,549 $39,545 $54,502 $43,839 $41,784 $38,056
Gross Margins 47% 56% 60% 45% 42% 36%
Net Margins -5% 12% 41% 43% 19% 16%
Net Income (M) -$1,683 $4,881 $22,445 $18,788 $7,983 $6,166
Net Interest Expense (M) -$3,393 -$4,813 $3,119 $2,268 -$1,946 -$3,823
Depreciation & Amort. (M) $3,503 $1,254 -$3,962 $1,309 $1,428 $2,813
Diluted Shares (M) 5,126 5,130 4,840 4,779 4,539 4,539
Earnings Per Share -$0.33 $0.95 $4.47 $3.93 $1.76 $1.36
EPS Growth n/a 387.8787878787879% 370.52631578947364% -12.080536912751668% -55.216284987277355% -22.72727272727272%
Free Cash Flow (M) $8,406 $9,892 $20,646 $13,316 $11,332 $13,767
CAPEX (M) $3,704 $4,430 $5,033 $5,446 $5,920 n/a
Total Debt (M) $11,842 $12,473 $11,150 $25,424 $24,942 $29,584
Net Debt / EBITDA 0.61 -0.07 -0.02 1.12 1.36 1.81
Current Ratio 1.23 1.67 1.47 1.12 1.28 1.03

VALE has exceptional EPS growth, generally positive cash flows, and healthy leverage levels. Furthermore, VALE has similar gross margins to its peers and just enough current assets to cover current liabilities, as shown by its current ratio of 1.03.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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