The average target price of VALE3.SA is 69 and suggests 30% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 90.0. This translates into 70% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 55.0. This suggests 4% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Ferrous Minerals and Base Metals segments. The Ferrous Minerals segment produces and extracts iron ore and pellets, manganese, ferroalloys, and other ferrous products; and provides related logistic services. The Base Metals segment produces and extracts nickel and its by-products, such as gold, silver, cobalt, precious metals, and others, as well as copper. 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.

Brazil

Vale S.A.

Basic Materials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends every four months. 

VALE3.SA reported revenue of USD 37 197mn in the last 12 months, down 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 4% from FY24 to USD 1.36.

Over the past six months, the stock has consistently fallen, resulting in a 8% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 14ppts. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 1ppts and its growth decelerated by 1ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 36.3% in the last 12 months, a decline from 39.7% in FY23. 

Historically, VALE3.SA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 15.6%, down from 19.1% in FY23. 

Vale S.A. reported a return on equity (RoE) of 15.7% in the last 12 months, down from 21.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 7.8%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.6% in the last 12 months, a decrease from 9.0% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.1 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

VALE3.SA boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to slow historical revenue growth, excessive margin volatility.

In highly turbulent market conditions, VALE3.SA is not volatile. In other words, the stock will fall far less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be very low. 

In normal market circumstances, VALE3.SA is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

From both historical and forecast perspectives, the stock is slightly overpriced compared to similar stocks. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, overvalued on P/FCF. 

Vale S.A.

R$ 50.48

6

Vale S.A.

R$ 50.48

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 50.48

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