A strong performer from today's afternoon trading session is VALE, whose shares rose 1.5% to $10.84 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
The Market May Be Undervaluing VALE's Assets and Equity:
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 8.9 and a P/B ratio of 0.22.
VALE has moved 0.8% over the last year compared to 16.9% for the S&P 500 — a difference of -16.1%. 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.
