Vale S.A

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

Vale
  • 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%.
Author
author
  • 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.