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Is VALE S.A. (VALE) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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) is a stock many investors are watching right now. VALE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 6.84, while its industry has an average P/E of 6.86. Over the last 12 months, VALE's Forward P/E has been as high as 9.68 and as low as 5.72, with a median of 7.53.

VALE is also sporting a PEG ratio of 1.62. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. VALE's PEG compares to its industry's average PEG of 1.63. Over the past 52 weeks, VALE's PEG has been as high as 1.93 and as low as 1.60, with a median of 1.70.

Another notable valuation metric for VALE is its P/B ratio of 1.61. 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 stock's P/B looks attractive against its industry's average P/B of 1.61. VALE's P/B has been as high as 2 and as low as 1.30, with a median of 1.61, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VALE has a P/S ratio of 1.93. This compares to its industry's average P/S of 5.26.

Finally, our model also underscores that VALE has a P/CF ratio of 9.88. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. VALE's current P/CF looks attractive when compared to its industry's average P/CF of 9.91. Within the past 12 months, VALE's P/CF has been as high as 11.22 and as low as 5.67, with a median of 8.73.

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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