Vale SA (VALE) AI Stock Analysis

• Market Cap: $41.95B
• Dividend Yield: 8.72%
• Average Volume (3M): 51.68M
• Price to Earnings (P/E): 7.3
• Beta (1Y): 0.80
• Revenue Growth: -9.59%
• EPS Growth: -25.35%
• Country: US
• Employees: 64,616
• Sector: Basic Materials
• Sector Strength: 67
• Industry: Industrial Materials
• EPS (TTM): 0.50
• Shares Outstanding: 4,539,008,000
• 10 Day Avg. Volume: 53,647,585
• 30 Day Avg. Volume: 51,676,190
• PEG Ratio: -1.68
• Price to Book (P/B): 1.18
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 35.89
• Enterprise Value/Market Cap: 1.28
• Enterprise Value/Revenue: 0.34
• Enterprise Value/Gross Profit: 4.06
• Enterprise Value/Ebitda: 0.95
• 1Y Price Target: $12.40
• Price Target Upside: 30.12% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 71 Outperform
• Price Target: $10.50 ▲(10.18%Upside)

Vale SA's overall stock score reflects solid financial performance and attractive valuation metrics, supported by a strong balance sheet and high dividend yield. However, technical analysis suggests caution due to mixed signals, and the company's challenges in revenue growth and declining free cash flow highlight areas for improvement. The earnings call underscores strategic progress, but market conditions remain a concern.

Positive Factors

Market Conditions

China's capacity rationalization is expected to support steelmaker margins, sustain iron ore prices, and support higher premiums.

Operational strategy

The company is targeting long-term production of 340-360Mtpa with several paths to achieve this, suggesting a robust production strategy.

Valuation

Analyst maintains a Buy rating recognizing the notable operational improvement and seeing the stock attractively valued.

Negative Factors

Investor Sentiment

Investors’ iron ore view remains bearish and that should cap Vale’s re-rate potential.

Nickel Market

The pure nickel assets continue to burn cash due to ongoing oversupply and price pressure.

Production

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

Vale SA Business Overview & Revenue Model

Company Description

Vale 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 Money

Vale SA generates revenue predominantly through the extraction, production, and sale of iron ore and iron ore pellets, which are used as raw materials in steelmaking. The company benefits from long-term contracts with major steel producers worldwide, ensuring a stable demand for its products. In addition to iron ore, Vale is a major producer of nickel, contributing significantly to its revenue, especially given nickel's crucial role in the production of stainless steel and batteries for electric vehicles. The company also earns income from its operations in manganese, copper, and coal, albeit to a lesser extent. Vale's strategic investments in logistics infrastructure, such as railroads, ports, and ships, help optimize its supply chain and reduce transportation costs, enhancing its profitability. Furthermore, Vale engages in joint ventures and partnerships to strengthen its market position and expand its product offerings.

Vale SA Financial Statement Overview

Summary

Vale SA shows strong profitability with a Gross Profit Margin of 35.4% and a Net Profit Margin of 15.6%, though revenue growth is negative at -1.1%. The balance sheet is stable with a Debt-to-Equity Ratio of 0.53 and ROE at 16.5%. However, the decline in free cash flow by -54.1% indicates financial flexibility challenges.

Income Statement

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

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

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.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	37.54B	41.78B	43.84B	54.50B	40.02B
Gross Profit	13.60B	17.70B	19.81B	32.77B	20.98B
EBITDA	12.94B	15.56B	23.74B	32.23B	19.95B
Net Income	6.10B	7.98B	18.79B	22.45B	4.88B
Balance Sheet
Total Assets	80.25B	94.19B	86.89B	89.44B	92.01B
Cash, Cash Equivalents and Short-Term Investments	5.01B	3.66B	4.80B	11.90B	14.26B
Total Debt	17.74B	16.80B	15.44B	17.20B	20.11B
Total Liabilities	45.69B	53.20B	49.54B	54.14B	57.19B
Stockholders Equity	33.43B	39.46B	35.87B	34.47B	35.74B
Cash Flow
Free Cash Flow	2.92B	7.25B	6.04B	20.65B	10.10B
Operating Cash Flow	9.37B	13.16B	11.48B	25.68B	14.32B
Investing Cash Flow	-5.37B	-6.32B	-4.69B	-6.61B	-4.67B
Financing Cash Flow	-2.27B	-7.34B	-13.91B	-20.28B	-2.68B

Vale SA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VALE, the sentiment is Negative. The current price of 9.53 is below the 20-day moving average (MA) of 9.95, below the 50-day MA of 9.68, and above the 200-day MA of 9.46, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 42.43 is Neutral, neither overbought nor oversold. The STOCH value of 14.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VALE.

Vale SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHP	76 Outperform	$132.32B	11.77	26.13%	4.86%	-3.15%	54.08%
RIO	75 Outperform	$105.31B	3.93	21.04%	6.75%	0.03%	139.96%
MTRN	73 Outperform	$1.92B	120.28	1.79%	0.54%	5.56%	-79.38%
VALE	71 Outperform	$41.95B	7.27	15.98%	8.72%	-9.59%	-25.35%
MP	64 Neutral	$10.67B	―	-9.62%	―	4.63%	-3189.81%
NEXA	59 Neutral	$662.19M	―	-16.64%	2.13%	12.30%	42.72%
Sector *	44 Neutral	AU$1.49B	-6.14	-41.46%	4.16%	-2.94%	-41.86%