Vale (VALE) Weak In Early Morning Trading

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Vale ( VALE) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Vale as such a stock due to the following factors:

  • VALE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $227.0 million.
  • VALE traded 63,936 shares today in the pre-market hours as of 7:39 AM.
  • VALE is down 3.8% today from yesterday's close.

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More details on VALE:

Vale S.A. engages in the research, production, and marketing of iron ore and pellets, nickel, fertilizers, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The stock currently has a dividend yield of 0.9%. VALE has a PE ratio of 12.9. Currently there are 6 analysts that rate Vale a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Vale has been 16.7 million shares per day over the past 30 days. Vale has a market cap of $71.1 billion and is part of the basic materials sector and metals & mining industry. Shares are down 9.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vale as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 13.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • VALE SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALE SA reported lower earnings of $0.94 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $0.94).
  • VALE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.88%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Net operating cash flow has decreased to $4,632.98 million or 21.96% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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