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The Zacks Consensus Estimate for Vale’s third-quarter sales is pegged at $10.75 billion, indicating an 8.3% increase from the year-ago quarter's reported figure. The consensus mark for earnings has moved up 5% over the past 30 days and is pegged at 60 cents per share. The figure suggests a slump of 39% from the prior-year quarter's reported number.
Q2 Results
Vale’s second-quarter 2023 earnings per share and revenues came in lower than the year-ago quarter due to a decline in iron ore and nickel prices. The company missed the Zacks Consensus Estimate on both metrics.
In the last four quarters, VALE has missed the consensus estimate in two quarters and delivered beats in the other two quarters. The company has an average surprise of 0.8% in the trailing four quarters.
Vale’s recently provided third-quarter 2023 production update, which can provide an indication of how the company is likely to fare in the to-be-reported quarter. Iron ore production was around 86.2 Mt in the quarter, which was down 4% year over year. This was mainly due to lower run-of-mine production from the Paraopeba complex, a temporary stoppage at the Viga operations due to one-off maintenance of the tailings pipeline and lower output from Serra Norte. The figure, however, came in higher than the Zacks Consensus Estimate of 85.4 Mt.
Despite lower production, iron ore sales improved 6.6% year over year to 69.7 Mt and pellet sales rose 1% to 8.6 Mt in the third quarter. This improvement was courtesy of favorable market conditions.
The company reported that the realized price for iron ore fines was up 13.5% year over year to $105.1 per ton due to higher benchmark prices and a positive impact from pricing adjustment. Iron ore pellets’ average realized prices declined 17% to $161.2 per ton due to lower quarterly pellet premiums, which were partially offset by higher benchmark iron ore prices.
The Iron Solutions segment accounts for around 93% of Vale’s revenues. The Zacks Consensus Estimate for iron ore revenues for the to-be-reported quarter is around $7 billion, indicating 16% growth year over year, thus reflecting the higher sales volumes and improved prices. The consensus mark for pellets revenues is $1.4 billion, suggesting a 16% decline from the year-ago quarter. The decline in average realized prices is expected to have negated the gain of higher pellet sales volumes in the quarter.
Nickel sales were down 11.5% year over year to 39.2 kt, attributed to lower production due to the ongoing transitioning of Voisey’s Bay mine to underground operations and maintenance at the Sudbury refinery. The figure was higher than the consensus estimate of 36.8 kt. Average realized prices for nickel declined 2% year over year to $21,237 per ton due to lower LME prices. The Zacks Consensus Estimate for nickel revenues for the quarter is $647 million.
Vale sold 73.8 kt of copper, which came in 4.7% higher than last year’s quarter. The figure also surpassed the Zacks Consensus Estimate of 60 kt.
The average realized price for copper operations only (Salobo and Sossego) was $7,731 per ton for the quarter, up 16% year over year due to higher LME prices. The average realized copper price for all operations (including copper sales originating from nickel operations) was $7,680 per ton in the third quarter of 2023. The Zacks Consensus Estimate for copper revenues is $1.16 billion.
Overall, Vale’s revenues in the third quarter will reflect the improvement in iron ore and copper revenues due to improved sales volumes and prices. This is expected to have been partially offset by lower nickel sales volume and lower pellet and nickel prices. The company has been facing higher input costs, particularly diesel and freight costs, which are likely to have weighed on its margins in the quarter to be reported. However, cost-control efforts are expected to have negated some of this impact.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Vale this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. That is not the case here, as you will see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Vale is -4.90%.
Zacks Rank: The company currently has a Zacks Rank of 2.
Price Performance
In a year, shares of Vale have declined 6.1% compared with the industry’s 6% fall.
Image Source: Zacks Investment Research
Stocks That Warrant a Look
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
The Zacks Consensus Estimate for SILV’s earnings for the third quarter is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 25% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 239%.
Element Solutions Inc (ESI - Free Report) , scheduled to release earnings on Oct 25, currently has an Earnings ESP of +1.94% and a Zacks Rank of 3.
The Zacks Consensus Estimate for ESI’s earnings for the third quarter is pegged at 34 cents per share. The consensus estimate for 2023 earnings has remained unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 1.1%.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release third-quarter earnings on Nov 8, presently has an Earnings ESP of +8.70% and a Zacks Rank of 3.
The consensus estimate for Kinross Gold’s earnings for the third quarter is pegged at 9 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 31.7%.
Image: Bigstock
Vale (VALE) Gears Up to Report Q3 Earnings: What to Expect?
Vale S.A. (VALE - Free Report) is scheduled to report third-quarter 2023 results on Oct 26, after the closing bell.
Q3 Estimates
The Zacks Consensus Estimate for Vale’s third-quarter sales is pegged at $10.75 billion, indicating an 8.3% increase from the year-ago quarter's reported figure. The consensus mark for earnings has moved up 5% over the past 30 days and is pegged at 60 cents per share. The figure suggests a slump of 39% from the prior-year quarter's reported number.
Q2 Results
Vale’s second-quarter 2023 earnings per share and revenues came in lower than the year-ago quarter due to a decline in iron ore and nickel prices. The company missed the Zacks Consensus Estimate on both metrics.
In the last four quarters, VALE has missed the consensus estimate in two quarters and delivered beats in the other two quarters. The company has an average surprise of 0.8% in the trailing four quarters.
VALE S.A. Price and EPS Surprise
VALE S.A. price-eps-surprise | VALE S.A. Quote
Factors to Note
Vale’s recently provided third-quarter 2023 production update, which can provide an indication of how the company is likely to fare in the to-be-reported quarter. Iron ore production was around 86.2 Mt in the quarter, which was down 4% year over year. This was mainly due to lower run-of-mine production from the Paraopeba complex, a temporary stoppage at the Viga operations due to one-off maintenance of the tailings pipeline and lower output from Serra Norte. The figure, however, came in higher than the Zacks Consensus Estimate of 85.4 Mt.
Despite lower production, iron ore sales improved 6.6% year over year to 69.7 Mt and pellet sales rose 1% to 8.6 Mt in the third quarter. This improvement was courtesy of favorable market conditions.
The company reported that the realized price for iron ore fines was up 13.5% year over year to $105.1 per ton due to higher benchmark prices and a positive impact from pricing adjustment. Iron ore pellets’ average realized prices declined 17% to $161.2 per ton due to lower quarterly pellet premiums, which were partially offset by higher benchmark iron ore prices.
The Iron Solutions segment accounts for around 93% of Vale’s revenues. The Zacks Consensus Estimate for iron ore revenues for the to-be-reported quarter is around $7 billion, indicating 16% growth year over year, thus reflecting the higher sales volumes and improved prices. The consensus mark for pellets revenues is $1.4 billion, suggesting a 16% decline from the year-ago quarter. The decline in average realized prices is expected to have negated the gain of higher pellet sales volumes in the quarter.
Nickel sales were down 11.5% year over year to 39.2 kt, attributed to lower production due to the ongoing transitioning of Voisey’s Bay mine to underground operations and maintenance at the Sudbury refinery. The figure was higher than the consensus estimate of 36.8 kt. Average realized prices for nickel declined 2% year over year to $21,237 per ton due to lower LME prices. The Zacks Consensus Estimate for nickel revenues for the quarter is $647 million.
Vale sold 73.8 kt of copper, which came in 4.7% higher than last year’s quarter. The figure also surpassed the Zacks Consensus Estimate of 60 kt.
The average realized price for copper operations only (Salobo and Sossego) was $7,731 per ton for the quarter, up 16% year over year due to higher LME prices. The average realized copper price for all operations (including copper sales originating from nickel operations) was $7,680 per ton in the third quarter of 2023. The Zacks Consensus Estimate for copper revenues is $1.16 billion.
Overall, Vale’s revenues in the third quarter will reflect the improvement in iron ore and copper revenues due to improved sales volumes and prices. This is expected to have been partially offset by lower nickel sales volume and lower pellet and nickel prices. The company has been facing higher input costs, particularly diesel and freight costs, which are likely to have weighed on its margins in the quarter to be reported. However, cost-control efforts are expected to have negated some of this impact.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Vale this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. That is not the case here, as you will see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Vale is -4.90%.
Zacks Rank: The company currently has a Zacks Rank of 2.
Price Performance
In a year, shares of Vale have declined 6.1% compared with the industry’s 6% fall.
Image Source: Zacks Investment Research
Stocks That Warrant a Look
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
SilverCrest Metals Inc. (SILV - Free Report) , expected to release earnings on Nov 8, has an Earnings ESP of +17.24% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SILV’s earnings for the third quarter is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 25% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 239%.
Element Solutions Inc (ESI - Free Report) , scheduled to release earnings on Oct 25, currently has an Earnings ESP of +1.94% and a Zacks Rank of 3.
The Zacks Consensus Estimate for ESI’s earnings for the third quarter is pegged at 34 cents per share. The consensus estimate for 2023 earnings has remained unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 1.1%.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release third-quarter earnings on Nov 8, presently has an Earnings ESP of +8.70% and a Zacks Rank of 3.
The consensus estimate for Kinross Gold’s earnings for the third quarter is pegged at 9 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 31.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.