VALE
Vale S.A.
$14.08
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 48.7% below fair value
You pay
$14.08
Bear
$21.96
Fair
$27.45
Bull
$32.94
Bear
$21.96
+56.0%
$1.83 × 12x P/E
Fair
$27.45
+95.0%
$1.83 × 15x P/E
Bull
$32.94
+133.9%
$1.83 × 18x P/E
Adjust Assumptions
15.0x
1.83$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
7.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (37 analysts)
$16.36
Divergence from AlphaVal
68%
Summary
Applying a 15x P/E to adjusted EPS of $1.83, the base-case value is $27.45 per share. DDM cross-check: $482.81.
Warnings
The company's reported profits differ from official accounting profits by 216%. Check what costs are being left out of the adjusted number.
The company pays out 308% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $482.81 (above our primary estimate by 1659%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $16.36 (from 37 analysts). Our estimate is 68% 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