Vale is stronger in terms of the valuation metrics when compared to the iron ore giants. While considering the EV/Revenue metric, Vale is placed at a considerable position, but BHP Billiton has a stronger future sales prospect. Rio Tinto and Vale have strong P/E ratios, and investors can expect growth in the coming quarters. Moreover, Vale's trailing P/E is expected to drop to 8.01, which depicts that the investors can expect a strong 2014. When compared to the 'Industrial Metals and Minerals' industry, Vale seems to be highly undervalued as the industry has a high trailing P/E ratio of 60.9 times.
We believe that Vale isn't dominating the industry but does have solid potential to outnumber its peers. The stake sale and expansion project will bolster its revenue in the next year. Based on these initiatives to capitalize on iron ore, we expect the stock to go beyond its current trading level in the coming quarters.
Additional disclosure: Fusion Research is a team of equity analysts. This article was written by Madhu Dube, one of our research analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.