Should You Buy, Sell or Hold Vale Stock Post Q4 Earnings?

Shares of Vale S.A. VALE have inched up 1% since it reported fourth-quarter and 2024 results on Feb. 19. The company witnessed a 22% decline in fourth-quarter revenues while earnings plunged 64% attributed to lower iron ore prices. While revenues beat the Zacks Consensus Estimate, earnings fell short.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.VALE stock closed at $9.89 yesterday, 28% below its 52-week high of $13.68 and 18% above its 52-week low of $8.38. In the past year, Vale shares have lost 27% compared with the industry’s 27% decline. Meanwhile, the broader Zacks Basic Materials sector has moved down 0.7%, while the S&P 500 has climbed 18.2%.The downtrend in iron ore prices has reflected in VALE’s share price movement. Weak demand in China has weighed on demand for the steel-making ingredient. Image Source: Zacks Investment ResearchLet us delve deeper into the company’s fourth-quarter results and long-term prospects before assessing whether to buy, hold or sell the stock.Iron Ore Prices Weigh on Vale’s Q4 ResultsVale’s net operating revenues were down 22% year over year to around $10.1 billion. The Iron Solutions segment’s revenues declined 26% year over year due to 10% lower sales volumes and a 21% drop in prices. Nickel revenues were down 9% year over year attributed to a 2% dip in sales volume and a 12% decline in prices. Copper revenues gained 13% aided by a 16% jump in prices that offset the impact of a 3% dip in sales volumes.Vale’s pro-forma adjusted EBITDA (including associates and joint ventures and excluding expenses related to Brumadinho) was down 40% year over year to approximately $4.12 billion, mainly reflecting lower iron ore prices and sales volumes. Proforma EBITDA margin was 41% in the fourth quarter compared with 53% in the year-ago quarter.   Adjusted earnings per share plunged 64% to 20 cents. Click here for a more detailed report of Vale’s Q4 results.Mixed Earnings Estimate Revision Activity for ValeThe Zacks Consensus Estimate for Vale’s earnings for fiscal 2025 has moved south while the same for fiscal 2026 has moved up over the past 60 days. This is shown in the chart below. Image Source: Zacks Investment ResearchDespite the downgrade, the earnings estimates for fiscal 2025 indicate year-over-year growth of 1.65%. Earnings estimates for fiscal 2026 imply year-over-year growth of 13.8%.Image Source: Zacks Investment ResearchVale’s Long-Term Prospects Seem EncouragingRobust Project Pipeline Underpins Vale's Growth: The company expects to raise its iron ore production to 325-335 Mt in 2025, 340-360 MT in 2026 and 360 Mt by 2030. The Vargem Grande 1 project and the Capanema Maximization project are expected to play a key role in attaining these targets. Other projects underway are Compact Crushing at S11D (capacity: 50 Mtpy, start-up in the second half of 2026) and Serra Sul (capacity: 20 Mtpy, start-up in the second half of 2026).Vale is also heavily investing in growing the Energy Transition Metals business. In December 2024, the company completed Voisey’s Bay Mine Expansion project, transitioning from open pit to underground mining. The two underground mines — Reid Brook and Eastern Deeps — will deliver ore for processing at VALE’s Long Harbour refinery, one of the lowest-emission nickel processing plants in the world. The project’s production capacity is around 45 ktpy of nickel, 20 ktpy of copper and 2.6 ktpy of cobalt as by-products. Full ramp-up is expected by the second half of 2026. Vale expects copper output to be in the band of 340-370 kt for 2025. Copper output is expected to reach 420-500 kt by 2030, aided by the Bacaba and Alemão projects. Vale has plans to hit 700 kt levels by 2035, primarily through the accelerated development of assets in the North and South hubs in the Carajás region.  The Onça Puma 2nd Furnace project is 75% completed. It has a capacity of 12-15 ktpy of nickel and is expected to start up production in the second half of 2025. Vale expects nickel production to be in the band of 160-175 kt for 2025 and 175-210 kt for 2026. Nickel production is expected to reach 210-250 kt by 2030. The company has secured agreements to supply low-carbon and high-purity nickel to major automakers and is strategically focused on expanding mine life and the development of growth projects across the portfolio.Price Recovery on the Horizon: Going forward, growth in world steel production, spurred by urbanization, will fuel demand for iron ore and help sustain prices. The long-term outlook for copper is positive as copper demand is expected to grow, partly driven by electric vehicles, and renewable energy and infrastructure investments. Nickel demand for electric vehicle batteries is also expected to grow.Vale Offers Sector-Leading Dividend Yield & ReturnsThe company’s current dividend yield of 9.28% is higher than the sector’s 2.46% and the S&P 500’s 1.23%. Its payout rate is at 59.92%, higher than the sector’s 55.05% and the S&P 500’s 1.22%. The company has a five-year dividend growth of 10.5%.VALE’s return on equity, a profitability measure of how prudently it is utilizing its shareholders’ funds, is 17.9%, higher than the sector’s average of 11.5%.VALE’s Attractive ValuationThe company is trading at a forward 12-month P/E ratio of 5.23X, a discount to the sector’s 15.36X.Image Source: Zacks Investment ResearchThe stock is also cheaper than other iron miners like Rio Tinto RIO, Fortescue Ltd FSUGY and BHP Group BHP, which are trading at 9.9, 10.76 and 12.31, respectively.How Should Investors Play VALE Stock?The downtrend in iron ore prices continues to impact Vale’s results. Those who already own this Zacks Rank #3 (Hold) stock should stay invested to benefit from the company’s solid project portfolio and the long-term positive outlook for iron ore prices, copper and nickel.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BHP Group Limited Sponsored ADR (BHP): Free Stock Analysis Report VALE S.A. (VALE): Free Stock Analysis Report Rio Tinto PLC (RIO): Free Stock Analysis Report Fortescue Ltd. Sponsored ADR (FSUGY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks