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Is VALE S.A. (VALE) a Great Value Stock Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

VALE S.A. (VALE) is a stock many investors are watching right now. VALE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.75, which compares to its industry's average of 6.76. VALE's Forward P/E has been as high as 9.68 and as low as 5.72, with a median of 7.42, all within the past year.

Investors will also notice that VALE has a PEG ratio of 1.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VALE's industry currently sports an average PEG of 1.60. VALE's PEG has been as high as 1.93 and as low as 1.60, with a median of 1.69, all within the past year.

Investors should also recognize that VALE has a P/B ratio of 1.62. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. VALE's current P/B looks attractive when compared to its industry's average P/B of 1.63. Within the past 52 weeks, VALE's P/B has been as high as 2 and as low as 1.30, with a median of 1.62.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. VALE has a P/S ratio of 1.91. This compares to its industry's average P/S of 4.85.

Finally, investors should note that VALE has a P/CF ratio of 9.97. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10. Over the past year, VALE's P/CF has been as high as 11.22 and as low as 5.67, with a median of 9.08.

Value investors will likely look at more than just these metrics, but the above data helps show that VALE S.A. Is likely undervalued currently. And when considering the strength of its earnings outlook, VALE sticks out at as one of the market's strongest value stocks.


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