| Can Vale Counter Multiple Headwinds with Growth Strategies? | |
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We issued an updated research report on the premium industrial metals & minerals company Vale S.A. VALE on Sep 11, 2015. The company is currently regarded as the largest exporter and importer of iron ore and pellets in the global mining market. Since 1942, the company has significantly improved the scale of its business on the back of tactical strategies. However, of late, Vale’s business is troubled by certain risks associated with external headwinds.
Scopes for Improvement
Increasing global industrialization has enhanced demand for the industrial raw materials. High economic growth in some developed countries such as the U.S. is augmenting the demand for iron, copper and aluminum in the market. We believe these aspects would help increase Vale's top-line figures in the upcoming quarters. Also, Vale expects to improve its business with the help of specialized cost-saving plans, productivity enhancement strategies and innovative growth projects. Moreover, with efficient disinvestment programs and tactful capital-deployment strategies, the company aims to stabilize its absolute debt level in the near future.
Problems to Consider
Excess supply over demand, economic downturn in China and severe rivalry between mining giants recently brought about a fall in iron ore prices. Weakening market prices of iron ore continue to hurt Vale's aggregate revenues and margins.
On the other hand, since the company aims to augment the productivity of iron ore, subsequent news of higher output has only served to trigger negative sentiments in the iron ore commodity market. This is because rising output will add to the global supply of the material, weighing on its equilibrium prices. Ultimately, this would drag the price of iron ore further downward, dampening the company's top-and bottom-line results in the upcoming quarters.
Also, Vale's business remains highly sensitive to the current global and domestic economic uncertainties. Moreover, environmental issues such as natural disasters, abnormal rainfall, shortage of skilled workers and destabilizing industrial infrastructure continue to threaten the company's performance. Stocks to Consider
Vale currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Anglo American Platinum Limited AGPPY, Akzo Nobel N.V. AKZOY and Arkema S.A. ARKAY. All three stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VALE SA (VALE): Free Stock Analysis Report ARKEMA-ADR (ARKAY): Free Stock Analysis Report ANGLO AMER PLAT (AGPPY): Free Stock Analysis Report AKZO NOBEL NV (AKZOY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Vale
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EXPLORATION STAGE |
CODE : VALE3.SA |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Vale is a producing company based in Brazil. Its main exploration property is GALIURO in USA. Vale is listed in Brazil and in France. Its market capitalisation is BRL 297.2 billions as of today (US$ 150.8 billions, € 136.0 billions). Its stock quote reached its lowest recent point on February 19, 2016 at BRL 10.51, and its highest recent level on August 27, 2021 at BRL 99.80. Vale has 5 244 319 744 shares outstanding. |