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Vale SA (VALE)
NYSE:VALE

Vale SA (VALE) AI Stock Analysis

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VA

Vale SA

(NYSE:VALE)

68Neutral
Vale's overall stock score reflects solid financial performance with strong profitability and a stable balance sheet but highlights key challenges in revenue growth and free cash flow. The technical analysis shows mixed signals, with potential short-term weakness. The valuation is hindered by the absence of a P/E ratio but supported by an attractive dividend yield. The earnings call provided a balanced outlook with positive strategic initiatives but was offset by external pressures such as declining iron ore prices.
Positive Factors
Dividend and Buyback
Vale announced a new 18-month buyback program of 120 million shares, representing 3% of its outstanding shares, along with a substantial dividend payment.
Iron Ore Sales
Iron ore sales, including pellets and ROM, exceeded expectations by 1.8%, showing strong market performance.
Valuation
Vale is attractively valued at 4.2x EV/EBITDA, making it an appealing investment opportunity.
Negative Factors
Analyst Rating
An analyst maintains a Neutral rating on Vale due to a cautious outlook on the iron ore market, despite fair valuation assessments.
Iron Ore Production
Vale's iron ore production fell 5.2% short of analyst consensus and decreased 4.5% year over year, indicating challenges in production volumes.
Pellet Production
Pellet production experienced a significant decline both quarter over quarter and year over year, impacted by issues like lower production in Tubarão and adverse weather conditions.

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

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 faced a challenging fiscal year with declines in revenue, profitability, and cash flow metrics. Despite these challenges, the company maintains a stable balance sheet and a solid equity base, though pressures in the mining sector are evident. The company remains profitable, albeit at reduced margins, and must leverage its solid financial base for stabilization.
Income Statement
72
Positive
Vale SA's income statement shows a challenging year-over-year decline in several key metrics. Revenue decreased by 20.3% from 2023 to 2024. Gross Profit Margin was 36.3%, and Net Profit Margin was 15.3% in 2024, down from 42.4% and 19.1% in 2023 respectively. The EBIT and EBITDA margins also declined, indicating reduced operational efficiency. Despite these challenges, the company remains profitable, although at a lower margin compared to previous years.
Balance Sheet
68
Positive
Vale SA's balance sheet reflects a moderately leveraged position with a Debt-to-Equity ratio of 0.53 in 2024. The Equity Ratio stood at 41.7%, indicating a stable equity base. Return on Equity was 15.3%, reflecting a decline in profitability. The company's equity base remains robust, though total assets have decreased, reflecting the current industry challenges.
Cash Flow
65
Positive
The cash flow statement shows a significant decrease in Free Cash Flow, dropping by 66.8% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio was 1.59, indicating strong cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio was 0.48, reflecting reduced cash available for reinvestment and dividends. This highlights potential cash flow challenges amidst declining revenues.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
37.54B41.78B43.84B54.50B40.02B
Gross Profit
13.60B17.70B19.81B32.77B20.98B
EBIT
10.99B14.21B17.21B27.69B16.72B
EBITDA
12.94B15.56B23.74B32.23B19.95B
Net Income Common Stockholders
6.10B7.98B18.79B22.45B4.88B
Balance SheetCash, Cash Equivalents and Short-Term Investments
5.01B3.66B4.80B11.90B14.26B
Total Assets
80.25B94.19B86.89B89.44B92.01B
Total Debt
17.74B16.80B15.44B17.20B20.11B
Net Debt
12.78B13.19B10.70B5.48B6.62B
Total Liabilities
45.69B53.20B49.54B54.14B57.19B
Stockholders Equity
33.43B39.46B35.87B34.47B35.74B
Cash FlowFree Cash Flow
2.44B7.36B6.04B20.65B9.89B
Operating Cash Flow
8.12B13.40B11.48B25.68B14.32B
Investing Cash Flow
-4.98B-6.49B-4.69B-6.61B-4.67B
Financing Cash Flow
-1.85B-7.41B-13.91B-20.28B-2.68B

Vale SA Technical Analysis

Technical Analysis Sentiment
Negative
Last Price9.37
Price Trends
50DMA
9.50
Negative
100DMA
9.15
Positive
200DMA
9.60
Negative
Market Momentum
MACD
-0.02
Negative
RSI
49.16
Neutral
STOCH
31.72
Neutral
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 9.37 is above the 20-day moving average (MA) of 9.21, below the 50-day MA of 9.50, and below the 200-day MA of 9.60, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 49.16 is Neutral, neither overbought nor oversold. The STOCH value of 31.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (49)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BHBHP
76
Outperform
$124.56B10.9026.13%5.02%-3.15%54.08%
RIRIO
74
Outperform
$97.72B8.0120.93%6.69%-0.81%14.59%
68
Neutral
$39.85B6.9915.98%7.97%
65
Neutral
$1.71B291.151.14%0.66%6.97%-87.87%
MPMP
62
Neutral
$4.09B-5.41%-19.57%-392.96%
58
Neutral
$749.60M-20.22%6.28%29.57%
49
Neutral
$1.95B-1.37-21.20%3.73%0.84%-29.84%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VALE
Vale SA
9.37
-2.30
-19.71%
BHP
BHP Group
48.83
-5.40
-9.96%
MTRN
Materion
81.93
-25.51
-23.74%
RIO
Rio Tinto
59.70
-5.79
-8.84%
NEXA
Nexa Resources SA
5.66
-1.74
-23.51%
MP
MP Materials
25.01
8.91
55.34%

Vale SA Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: -3.90%|
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.