VALE
Vale S.A.
$14.46
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 43.2% below fair value
You pay
$14.46
Bear
$20.36
Fair
$25.45
Bull
$30.55
Bear
$20.36
+40.8%
$1.92 × 12x P/E
Fair
$25.45
+76.0%
$1.92 × 15x P/E
Bull
$30.55
+111.3%
$1.92 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
7.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $17.79 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $25.45 per share.
Warnings
The company's reported profits differ from official accounting profits by 230%. Check what costs are being left out of the adjusted number.
The company pays out 255% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $17.79 (from 37 analysts). Our estimate is 62% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples