On Mar 11, we reaffirmed our Neutral recommendation on the
), since we are optimistic about the company's cost saving
initiatives despite the weak results.
Why the Neutral Stance?
Though Vale's fourth-quarter results (announced on Feb 27)
missed both the Zacks Consensus Estimate and the prior quarter's
earnings, its earnings for full year 2012 beat the Zacks
Consensus Estimate. A weak global economy coupled with low prices
for most of its products severely impacted revenue.
Revenue was also hurt by a lower production of pellets,
ferroalloys, manganese ore, nickel, copper, potash and nitrogen,
which offset the increase in production of iron-ore, coal and
Over the last 30 days, only a few of the estimates have been
revised upwards for 2013 and 2014, showing optimism about the
cost saving measures undertaken by Vale. However, there still
seems to be skepticism relating to the recent results. The
revision has led to an increase of 3.1% to $2.31 per share in the
Zacks Consensus Estimate for 2013. However, the estimate has gone
down by 1.8% to $2.73 per share. Vale currently holds a Zacks
Rank #3 (Hold).
However, Vale's continuous efforts to curtail costs are paying
off well. It has been divesting its non-profitable and low margin
assets and has plans to continue to do so in the near future. The
company has been taking steps like CORe project in Sudbury,
leading to lower operational costs and using hydrometallurgical
flowsheet, which enhances efficiency and reduces wastage and
Other Stocks to Consider
Other stocks in the mining domain that are presently doing
Uranerz Energy Corp.
Paramount Gold and Silver Corp
); each carrying a Zacks Rank #2 (Buy).
PARAMOUNT GOLD (PZG): Get Free Report
UR-ENERGY INC (URG): Free Stock Analysis
URANERZ ENERGY (URZ): Free Stock Analysis
VALE SA (VALE): Free Stock Analysis Report
To read this article on Zacks.com click here.