Vale (VALE) Gears Up to Report Q2 Earnings: What to Expect?
Vale S.A. VALE is scheduled to report second-quarter 2023 results on Jul 27, after the closing bell.
Q2 Estimates
The Zacks Consensus Estimate for Vale’s second-quarter sales is pegged at $10.2 billion, indicating a decline of 8.7% from the year-ago quarter. The consensus mark for earnings is currently at 57 cents per share. The estimate has moved down 10% to 57 cents per share over the past 60 days. The figure suggests a slump of 35% from the prior-year quarter.
Q1 Results
Vale’s first-quarter 2023 earnings per share and revenues came in lower than the year-ago quarter due to a decline in iron ore and pellet prices as well as lower volumes. The company missed the Zacks Consensus Estimate on both metrics.
In the last four quarters, VALE has missed the consensus estimate in one quarter and delivered a beat in the other three quarters. The company has an average surprise of 18.5%.
VALE S.A. Price and EPS Surprise
VALE S.A. price-eps-surprise | VALE S.A. Quote
Factors to Note
Vale’s recently-provided second-quarter 2023 production update can provide an indication of how the company is likely to fare in the to-be-reported quarter. Iron ore production was around 78.7 million tons in the second quarter, which improved 6% year over year. It came in higher than the Zacks Consensus Estimate of 76.7 Mt. This outperformance was aided by record output at S11D and solid performances at Itabira and Vargem Grande complexes. Pellet production also rose 5% year over year to 9.1 Mt.
However, total sales volumes of iron ore fines and pellets were up a meager 1% from the prior year quarter to 72 Mt. Following restrictions due to heavy rains that impacted shipments in the first quarter of 2023, the Ponta da Madeira Terminal resumed productivity during the second quarter.
The company reported that the realized price for iron ore fines was down 13% year over year to $98.5 per ton due to lower benchmark prices. Iron ore pellets’ average realized prices slumped 20% to $164 per ton. Weak year-over-year sales volumes and lower realized prices for iron ore are expected to reflect in Vale’s second-quarter results.
The Iron Solutions segment accounts for around 93% of Vale’s revenues. The Zacks Consensus Estimate for iron ore for the to-be-reported quarter is $6.6 billion, indicating a 7% decline year over year. The consensus mark for pellets revenues is at $1.2 billion, suggesting a 32% decline from the year-ago quarter.
Nickel sales were up 2.5% year over year to 40.3 kt, lower than the consensus estimate of 41.7 kt. Average realized prices for nickel declined 12% year over year to $23,070 per ton, due to lower LME prices.
Vale sold 73.8 kt of copper, which came in 43% higher than the last year’s quarter. The figure however lagged the Zacks Consensus Estimate of 84.5 kt.
The average realized price for copper operations only (Salobo and Sossego) was $7,025 per ton for the quarter, up 12.6% year over year. The lower impact of provisional price adjustment helped offset the 11% decline in LME prices. The average realized copper price for all operations (including copper sales originated from nickel operations) was $6,986 per ton in the second quarter of 2023.
Gains from improved sales volumes for copper and nickel as well as higher copper prices, are expected to have been offset by lower iron ore 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 -8.3%.
Zacks Rank: The company currently has a Zacks Rank of 3.
Price Performance
In a year’s time, shares of Vale have gained 11.6%, compared with the industry’s 11.3% growth.
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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:
ATI Inc. ATI is scheduled to release second-quarter 2023 earnings on Aug 2. The company has an Earnings ESP of +1.08% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ATI’s second-quarter earnings has moved up 2% in the past 60 days. The consensus estimate for the company’s earnings for the quarter is pegged at 55 cents per share, which indicates year-over-year growth of 1.9%. The company has an average surprise of 13% in the trailing four quarters.
Axalta Coating Systems Ltd. AXTA, which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02%. It currently carries a Zacks Rank of 2.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents per share. The estimate has remained unchanged over the past 60 days. AXTA has an average surprise of 5.2% in the trailing four quarters.
Agnico Eagle Mines Limited AEM, which is scheduled to release earnings on Jul 26, has an Earnings ESP of +3.84% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Agnico Eagle’s second-quarter earnings is pegged at 55 cents per share. The estimate has moved up 10% over the past 60 days. The consensus mark suggests a year-over-year decline of 26.7%. AEM has an average surprise of 17.9% in the trailing four quarters.
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