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Should Value Investors Buy VALE S.A. (VALE) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

VALE S.A. (VALE - Free Report) is a stock many investors are watching right now. VALE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.72. This compares to its industry's average Forward P/E of 4.73. Over the past year, VALE's Forward P/E has been as high as 8.20 and as low as 4.02, with a median of 5.35.

Finally, we should also recognize that VALE has a P/CF ratio of 7.99. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. VALE's current P/CF looks attractive when compared to its industry's average P/CF of 9.84. Within the past 12 months, VALE's P/CF has been as high as 14.68 and as low as 6.25, with a median of 10.79.

These figures are just a handful of the metrics value investors tend to look at, but they help show that VALE S.A. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VALE feels like a great value stock at the moment.


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