Back to top

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

Read MoreHide Full Article

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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

VALE S.A. (VALE - Free Report) is a stock many investors are watching right now. VALE is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.37, while its industry has an average P/E of 6.85. Over the past 52 weeks, VALE's Forward P/E has been as high as 11.79 and as low as 6.07, with a median of 8.87.

Another valuation metric that we should highlight is VALE's P/B ratio of 1.55. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.59. Within the past 52 weeks, VALE's P/B has been as high as 2 and as low as 1.40, with a median of 1.61.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. VALE has a P/S ratio of 1.81. This compares to its industry's average P/S of 5.38.

Finally, our model also underscores that VALE has a P/CF ratio of 8.68. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. VALE's P/CF compares to its industry's average P/CF of 8.95. Over the past year, VALE's P/CF has been as high as 11.22 and as low as 6.82, with a median of 8.54.

These are just a handful of the figures considered in VALE S.A.'s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that VALE is an impressive value stock right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


VALE S.A. (VALE) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in