In a note to investors Citi said the iron ore supply surge is peaking in the second quarter, and supply levels should level off in the second half of the year. Iron ore prices are close to $94 a ton this week, though Citi said it can find price support at $90 a ton, with prices increased to $100 a ton in the fourth quarter.
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- Net operating cash flow has slightly increased to $4,082.00 million or 3.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -37.28%.
- Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that VALE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.57 is high and demonstrates strong liquidity.
- The gross profit margin for VALE SA is rather high; currently it is at 51.08%. Regardless of VALE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VALE's net profit margin of 26.46% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has decreased by 18.0% when compared to the same quarter one year ago, dropping from $3,068.10 million to $2,515.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, VALE SA underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: VALE Ratings Report