Vale SA (VALE) AI Stock Analysis

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Vale SA

(NYSE:VALE)

Rating:74Outperform

Price Target:

$10.50

▲(15.89%Upside)

Vale's overall stock score is driven by attractive valuation metrics, including a low P/E ratio and high dividend yield, which suggest it is undervalued. Despite robust profitability and cost reduction efforts, concerns such as declining free cash flow and the impact of falling iron ore prices on EBITDA are risks. The earnings call provided mixed sentiments, balancing operational achievements with market challenges.

Positive Factors

Financial Performance

Vale's bottom-up story is seen as attractive, with good operational momentum and superior free cash flow generation.

Shareholder Returns

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

Valuation

Analyst maintains a Buy rating on Vale SA stock, finding it attractively valued at 4.2x EV/EBITDA and generating a 9.3% free cash flow.

Negative Factors

Iron Ore Production

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

Nickel Operations

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

Pellet Production

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

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

Market Cap

$39.82B

Dividend Yield16.02%

Average Volume (3M)29.68M

Price to Earnings (P/E)6.8

Beta (1Y)0.76

Revenue Growth-9.59%

EPS Growth-25.35%

CountryUS

Employees64,616

SectorBasic Materials

Sector Strength66

IndustryIndustrial Materials

Share Statistics

EPS (TTM)0.33

Shares Outstanding4,539,008,000

10 Day Avg. Volume37,893,795

30 Day Avg. Volume29,680,240

Financial Highlights & Ratios

PEG Ratio-0.16

Price to Book (P/B)1.75

Price to Sales (P/S)0.00

P/FCF Ratio9.56

Enterprise Value/Market Cap2.00

Enterprise Value/Revenue0.51

Enterprise Value/Gross Profit6.05

Enterprise Value/Ebitda1.41

Forecast

1Y Price Target

$11.93

Price Target Upside31.68% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

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 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 Key Performance Indicators (KPIs)

Any

Net Revenue by Segment

Net Revenue by Segment
Reveals revenue contributions from each business unit, indicating which areas are growing, stable, or declining, and providing insight into the company's strategic focus.

Chart InsightsVale's iron ore segment remains robust, with sales up 4% year-on-year, despite production challenges from adverse weather. However, the decline in iron ore prices has pressured EBITDA, highlighting the importance of Vale's cost reduction efforts and strategic focus on medium-grade products. The energy transition metals segment is gaining traction, with production up 11%, significantly boosting base metals EBITDA. This diversification could mitigate risks from volatile iron ore markets. Vale's ongoing growth projects and renewable energy initiatives underscore its commitment to sustainability and operational efficiency.

Data provided by:

Main Street Data

Vale SA Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -7.08%|

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.

Vale SA Financial Statement Overview

Summary

Vale SA demonstrates solid profitability with a strong gross profit margin and stable balance sheet, but faces challenges in revenue growth and free cash flow generation. The company's net profit margin and revenue growth rate have declined, and there is a significant decrease in free cash flow, which are areas of concern.

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
40.02B	37.54B	41.78B	43.84B	54.50B	40.02B
	Gross Profit
20.98B	13.60B	17.70B	19.81B	32.77B	20.98B
	EBIT
10.84B	10.99B	14.21B	17.21B	27.69B	16.72B
	EBITDA
12.23B	12.94B	15.56B	23.74B	32.23B	19.95B
	Net Income Common Stockholders
4.88B	6.10B	7.98B	18.79B	22.45B	4.88B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.18B	5.01B	3.66B	4.80B	11.90B	14.26B
	Total Assets
91.71B	80.25B	94.19B	86.89B	89.44B	92.01B
	Total Debt
19.37B	17.74B	16.80B	15.44B	17.20B	20.11B
	Net Debt
12.02B	12.78B	13.19B	10.70B	5.48B	6.62B
	Total Liabilities
52.72B	45.69B	53.20B	49.54B	54.14B	57.19B
	Stockholders Equity
40.07B	33.43B	39.46B	35.87B	34.47B	35.74B
Cash Flow		Free Cash Flow
9.89B	2.92B	7.25B	6.04B	20.65B	10.10B
	Operating Cash Flow
14.32B	9.37B	13.16B	11.48B	25.68B	14.32B
	Investing Cash Flow
-4.67B	-5.37B	-6.32B	-4.69B	-6.61B	-4.67B
	Financing Cash Flow
-2.68B	-2.27B	-7.34B	-13.91B	-20.28B	-2.68B

Vale SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.06

Price Trends

50DMA

9.43

Negative

100DMA

9.44

Negative

200DMA

9.53

Negative

Market Momentum

MACD

-0.04

Positive

RSI

39.02

Neutral

STOCH

3.72

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 9.06 is below the 20-day moving average (MA) of 9.45, below the 50-day MA of 9.43, and below the 200-day MA of 9.53, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 39.02 is Neutral, neither overbought nor oversold. The STOCH value of 3.72 is Positive, 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 (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RIO	77 Outperform	$95.01B	8.00	20.93%	7.90%	-0.81%	14.59%
VALE	74 Outperform	$39.82B	6.84	15.98%	16.02%	-9.59%	-25.35%
BHP	72 Outperform	$121.13B	10.63	26.13%	4.14%	-3.15%	54.08%
MTRN	64 Neutral	$1.61B	164.57	1.14%	0.72%	6.97%	-87.87%
MP	57 Neutral	$6.08B	―	-9.62%	―	4.63%	-3189.81%
NEXA	56 Neutral	$643.65M	―	-16.64%	2.08%	12.30%	42.72%
Sector *	51 Neutral	$1.99B	-1.26	-21.11%	5.30%	2.92%	-30.46%

* Basic Materials Sector Average

Performance Comparison

VALE

Vale SA

9.06

-1.37

-13.14%

BHP

BHP Group

46.14

-7.83

-14.51%

MTRN

Materion

76.81

-29.31

-27.62%

RIO

Rio Tinto

55.89

-6.39

-10.26%

NEXA

Nexa Resources SA

4.66

-2.95

-38.76%

MP Materials

37.74

24.06

175.88%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.