Vale SA (VALE) AI Stock Analysis

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Vale SA

(NYSE:VALE)

Rating:72Outperform

Price Target:

$10.50

▲( 9.38% Upside)

Vale's overall stock score is 72.25, reflecting a combination of solid profitability, attractive valuation, and balanced earnings call insights. The company benefits from strong operational performance and cost reduction efforts but faces challenges in revenue growth and free cash flow. The valuation remains compelling with a low P/E ratio and high dividend yield, making it attractive to income-focused investors. Technical indicators present a mixed outlook, suggesting caution in the short term.

Positive Factors

Sales Performance

Iron ore sales, including pellets and ROM, were 1.8% above the model and consensus, indicating strong performance in sales.

Shareholder Returns

Vale announced a new 18-month buyback program of 120mn shares, which is 3% of its outstanding shares.

Valuation

Vale is considered attractively valued, trading at 4.2x EV/EBITDA and generating a 9.3% free cash flow.

Negative Factors

Iron Ore Production

Total iron ore production dropped 4.5% year over year due to lower Northern, Southeast, and South systems volumes and lower pellet production.

Pellet Production

Pellet production dropped significantly both quarter over quarter and year over year, impacted by lower production in Tubarão and high rain levels.

Production Shortfall

Iron ore production was 5.2% below Visible Alpha consensus and dropped 4.5% year over year due to lower volumes and pellet production.

Vale SA (VALE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$41.06B

Dividend Yield7.78%

Average Volume (3M)26.25M

Price to Earnings (P/E)7.1

Beta (1Y)0.79

Revenue Growth-9.59%

EPS Growth-25.35%

CountryUS

Employees64,616

SectorBasic Materials

Sector Strength64

IndustryIndustrial Materials

Share Statistics

EPS (TTM)0.33

Shares Outstanding4,539,008,000

10 Day Avg. Volume25,856,233

30 Day Avg. Volume26,254,206

Financial Highlights & Ratios

PEG Ratio-1.63

Price to Book (P/B)1.13

Price to Sales (P/S)0.00

P/FCF Ratio35.69

Enterprise Value/Market Cap1.33

Enterprise Value/Revenue0.35

Enterprise Value/Gross Profit4.14

Enterprise Value/Ebitda0.96

Forecast

1Y Price Target

$11.23

Price Target Upside16.98% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Vale SA Business Overview & Revenue Model

Company DescriptionVale S.A., together with its subsidiaries, produces and sells iron ore, iron ore pellets, nickel, and copper in Brazil and internationally. The company operates through Iron Solutions and Energy Transition Materials segments. The Iron Solutions segment produces and extracts iron ore and pellets, and other ferrous products; and provides related logistic services. The Energy Transition Materials segment produces and extracts nickel; and its by-products, such as gold, silver, cobalt, precious metals, and others, as well as copper used in the construction sector to produce pipes and electrical wires. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio De Janeiro, Brazil.

How the Company Makes MoneyVale SA generates revenue primarily through the extraction, production, and sale of iron ore, which is a critical raw material in steel manufacturing. Iron ore sales account for the majority of Vale's income, driven by global demand from the construction and manufacturing sectors. Additionally, Vale produces and sells nickel, a key component in stainless steel and lithium-ion batteries, thus tapping into the growing market for renewable energy and electric vehicles. The company also earns from its logistics services, which include railways, ports, and shipping operations, enhancing its ability to efficiently transport raw materials. Strategic partnerships with other mining and steelmaking companies further bolster Vale's market presence and financial performance.

Vale SA Financial Statement Overview

Summary

Vale SA demonstrates solid profitability and a stable balance sheet but faces challenges in revenue growth and free cash flow generation. The company's margins remain strong, but a recent decline in net profit margin and revenue growth rate suggests potential headwinds in the market. The balance sheet is strong with manageable debt levels and a solid equity base, though the decline in ROE warrants attention. Cash flow performance, particularly the significant decline in free cash flow, is a key area for improvement to ensure long-term financial health.

Income Statement

Positive

Vale SA's income statement shows a mixed performance. The Gross Profit Margin for the TTM is approximately 35.4%, indicating strong profitability in its operations. However, the Net Profit Margin has decreased to 15.6% in the TTM from 16.3% in 2024, suggesting some pressure on net earnings. The Revenue Growth Rate has been negative over the past year at -1.1% from 2024 to TTM, indicating a slight contraction in sales. Overall, the company maintains solid profitability but faces challenges in revenue growth.

Balance Sheet

Positive

Vale SA's balance sheet reflects a stable financial position with a Debt-to-Equity Ratio of 0.53 in the TTM, slightly improved from 2024. The company's Return on Equity (ROE) is robust at 16.5%, down from 18.3% in 2024, showing effective utilization of equity though it has decreased. The Equity Ratio stands at 42.2%, indicating a strong equity base relative to its total assets. There is a concern with the reduction in ROE year-over-year, but the company maintains a healthy balance sheet with manageable debt levels.

Cash Flow

Positive

Vale SA's cash flow statement highlights some areas of concern. The Free Cash Flow Growth Rate is negative at -54.1% from 2024 to TTM, indicating a significant decrease in cash flow available after capital expenditures. The Operating Cash Flow to Net Income Ratio is healthy at 1.24, suggesting good cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio is lower at 0.19 in the TTM, reflecting constrained free cash flow. The company needs to address the decline in free cash flow to maintain financial flexibility.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
37.20B	37.54B	41.78B	43.84B	54.50B	40.02B
	Gross Profit
13.17B	13.60B	17.70B	19.81B	32.77B	20.98B
	EBIT
10.34B	10.99B	14.21B	17.21B	27.69B	16.72B
	EBITDA
13.49B	12.94B	15.56B	23.74B	32.23B	19.95B
	Net Income Common Stockholders
5.82B	6.10B	7.98B	18.79B	22.45B	4.88B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.50B	5.01B	3.66B	4.80B	11.90B	14.26B
	Total Assets
91.51B	80.25B	94.19B	86.89B	89.44B	92.01B
	Total Debt
14.65B	17.74B	16.80B	15.44B	17.20B	20.11B
	Net Debt
10.19B	12.78B	13.19B	10.70B	5.48B	6.62B
	Total Liabilities
52.58B	45.69B	53.20B	49.54B	54.14B	57.19B
	Stockholders Equity
37.40B	33.43B	39.46B	35.87B	34.47B	35.74B
Cash Flow		Free Cash Flow
1.12B	2.44B	7.36B	6.04B	20.65B	9.89B
	Operating Cash Flow
7.20B	8.12B	13.40B	11.48B	25.68B	14.32B
	Investing Cash Flow
-5.15B	-5.37B	-6.49B	-4.69B	-6.61B	-4.67B
	Financing Cash Flow
-1.78B	-1.85B	-7.41B	-13.91B	-20.28B	-2.68B

Vale SA Technical Analysis

Technical Analysis Sentiment

Positive

Last Price9.60

Price Trends

50DMA

9.57

Positive

100DMA

9.27

Positive

200DMA

9.57

Positive

Market Momentum

MACD

0.08

Negative

RSI

51.60

Neutral

STOCH

33.58

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VALE, the sentiment is Positive. The current price of 9.6 is above the 20-day moving average (MA) of 9.55, above the 50-day MA of 9.57, and above the 200-day MA of 9.57, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 51.60 is Neutral, neither overbought nor oversold. The STOCH value of 33.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VALE.

Vale SA Risk Analysis

Vale SA disclosed 38 risk factors in its most recent earnings report. Vale SA reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Vale SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHP	76 Outperform	$126.21B	11.14	26.13%	4.91%	-3.15%	54.08%
RIO	73 Outperform	$105.96B	8.65	20.93%	6.49%	-0.81%	14.59%
VALE	72 Outperform	$41.06B	7.06	15.98%	7.78%	-9.59%	-25.35%
MTRN	63 Neutral	$1.60B	163.59	1.14%	0.70%	6.97%	-87.87%
NEXA	58 Neutral	$664.84M	―	-16.64%	―	12.30%	42.72%
MP	56 Neutral	$3.22B	―	-9.62%	―	4.63%	-3189.81%
Sector *	50 Neutral	$2.00B	-1.13	-21.16%	3.71%	2.15%	-30.95%

* Basic Materials Sector Average

Performance Comparison

VALE

Vale SA

9.60

-1.86

-16.23%

BHP

BHP Group

49.89

-6.96

-12.24%

MTRN

Materion

76.69

-36.94

-32.51%

RIO

Rio Tinto

61.58

-4.88

-7.34%

NEXA

Nexa Resources SA

5.02

-2.87

-36.38%

MP Materials

19.69

2.99

17.90%

Vale SA Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -1.54%|

Next Earnings Date:Aug 01, 2025

Earnings Call Sentiment Neutral

The earnings call presented a balanced view with significant highlights such as increased iron ore sales, successful cost reductions, and advancements in growth projects. However, these were tempered by challenges like the impact of declining iron ore prices on EBITDA and reduced cash flow due to seasonal factors.

Q1-2025 Updates

Positive Updates

Iron Ore Sales Increase

Iron ore sales increased by 4% year-on-year, reaching 66 million tons, despite production being 4% lower.

Growth Projects Advancing

Three main growth projects in iron ore are progressing as planned, with Vargem Grande and Capanema expected to produce a combined 40 million tons in 2025.

Operational Excellence in Base Metals

Base metals saw a more than doubling of EBITDA compared to the same period last year, driven by strong operational performance and increased production.

Cost Reduction Success

Iron ore C1 cash costs reached $21 per ton, 11% lower year-on-year, driven by efficiency initiatives and favorable exchange rates.

Renewable Energy Milestone

Vale reached a milestone in sourcing all of its energy needs from renewables in Brazil in 2023, two years ahead of schedule.

Negative Updates

Iron Ore Price Decline Impact

Pro forma EBITDA decreased by 8% year-on-year, impacted by a 16% fall in iron ore prices during the same period.

Seasonal Cash Flow Reduction

Free cash flow decreased to approximately $500 million in Q1, down from $800 million in Q4, due to seasonally lower EBITDA and lower cash collection.

Company Guidance

During Vale's Q1 2025 earnings call, the company provided guidance on several performance metrics and strategic initiatives. Iron ore sales increased by 4% year-on-year, reaching 66 million tons, although production was 4% lower due to higher rainfall affecting operations. Vale's operational excellence initiatives resulted in higher production at the S11D mine, and the company continued to prioritize medium-grade products to maximize value amidst challenging margins in the steel industry. The ramp-up of Vargem Grande and Capanema is on track, expected to produce 40 million tons in 2025. Additionally, the expansion of the Plus 20 project at S11D is 73% complete, with operations set to begin in the second half of 2026, targeting a C1 cash cost in the mid-teens per ton. Vale's energy transition metals business also saw an 11% increase in production, contributing to a more than doubling of its EBITDA in the base metals segment. Financially, Vale reported a pro forma EBITDA of $3.2 billion, 8% lower year-on-year due to a 16% decline in iron ore prices, while maintaining a strong focus on cost reduction and capital discipline. The company reaffirmed its commitment to achieving its C1 cost guidance of $20.5 to $22 per ton for iron ore, supported by efficiency initiatives and favorable exchange rates. Looking ahead, Vale plans to continue leveraging its supply chain flexibility and advancing its sustainability goals, as detailed in its recently published integrated report.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.