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Vale (VALE) Earnings Surpass Estimates in Q3, Sales Miss

Vale S.A. VALE reported third-quarter 2022 adjusted earnings per share of 98 cents, which beat the Zacks Consensus Estimate of 60 cents. The company had reported earnings per share of $1.16 cents in the year-ago quarter. Lower sales volumes for iron ore combined with the decline in iron ore prices mainly led to the drop in earnings.

Including one-time items, the company had reported earnings per share of 76 cents in the third quarter of 2021.

Revenues

Net operating revenues declined 19.5% year over year to around $9.9 billion. The top line lagged the Zacks Consensus Estimate of $10.1 billion.

Net operating revenues from Ferrous Minerals plunged 26% year over year to $7.8 billion owing to lower iron ore prices. Base Metals’ net operating revenues soared 30% to $2.04 billion on a higher year-over-year sales volume for copper and nickel. Also, elevated nickel prices compared to last year quarter helped offset the impact of lower copper prices.

VALE S.A. Price, Consensus and EPS Surprise

VALE S.A. Price, Consensus and EPS Surprise
VALE S.A. Price, Consensus and EPS Surprise

VALE S.A. price-consensus-eps-surprise-chart | VALE S.A. Quote

Operating Performance

In the third quarter of 2022, the cost of goods sold totaled $6.3 billion, up 6% year over year. Gross profit plunged 43% year over year to $3.6 billion. The gross margin was 36.5% compared with 51.7% in the prior-year quarter.

Selling, general and administrative expenditures moved up 4% year over year to $119 million. Research and evaluation expenses climbed 26% to $170 million from the year-ago quarter.

Adjusted operating income was $2.9 billion in the reported quarter. The figure marked a 54% slump from the prior-year quarter. Adjusted EBITDA was $3.7 billion in the reported quarter compared with $6.9 billion in the prior-year quarter.

Pro-forma adjusted EBITDA (excluding expenses related to Brumadinho and COVID-19) plunged 43.5% year over year to $4 billion. Ferrous Minerals’ Adjusted EBITDA was $3.8 billion, reflecting a 44% downfall from the last-year quarter. Base Metals EBITDA came down to $364 million from $505 million in the prior-year quarter.

Balance Sheet & Cash Flow

Vale exited the third quarter of 2021 with cash and cash equivalents of around $14 billion compared with $20 billion at the end of last year quarter. Cash flow from operations was $3.4 billion in the quarter under review compared with $9.1 billion in the third quarter of 2021.

Gross debt at the end of third-quarter 2022 was $10.7 billion compared with $11.9 billion at the end of third-quarter 2021. Vale paid dividends of around $3.1 billion and repurchased shares for $686 million.

Price Performance

In the past year, shares of Vale have fallen 1.9%, in line with the industry’s decline.

Zacks Rank & Other Stocks to Consider

Vale currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Albemarle Corporation ALB, Sociedad Quimica y Minera de Chile S.A. SQM and Ryerson Holding Corporation RYI.

Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 430.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 10% in a year.

Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.

Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 67% in a year. The company currently carries a Zacks Rank #1.

Ryerson Holding, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.

Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 23% over a year.


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