Stock: VALE
Rating: Hold
Author: Waleed M. Tariq
Overview
- Vale S.A. is a global metals and mining company.
- It produces iron ore, pellets, steelmaking raw materials, and nick for stainless and metallic alloys.
- Vale explores for minerals in five countries. The group has energy, steel, and logistical investments
Bullish
- The company’s shares has risen about 56%.
- In the last two years, Vale S.A. has achieved strong growth and profitability.
Bearish
- 2022 iron ore prices are fluctuating, and China’s market is unclear.
- I will hold my investments until the iron ore market shows signs of stability later this year.
Vale stock and iron ore prices
- The dropping pricing in Q3 cost the corporation nearly $550 million in sales, as the data shows.
- Vale’s fourth-quarter prices are expected to rise, but analysts expect only $0.79 EPS for the year.
- If the company fails its Q4 EPS projection, the stock price will drop.
Profitability
- Since Q4 2019, the company’s TTM profitability has been improving, but growth has been dropping.
- The company’s operating margin rose from 2.5% to over 40% in the MRQ, and its net profit margin rose from 4.5% to over 31%.
- Despite rapid growth, the risks of buying the stock may outweigh the benefits, given price and usage issues in the Chinese market.
Shareholder Distributions
Through October 2021, dividends totaled $13.5 billion.
Since the last article, the Dividend Yield has fallen from 20% to 15%, mainly due to higher share prices, despite a dividend CAGR of 136.73% for 3 years and 88.10% for 5 years.
Conclusion
- Long-plays are still conceivable for investors who can stomach extreme volatility; for the rest of us, wait till the market stabilizes.