Vale (VALE) to Report Q1 Earnings: What's in the Offing?

Vale S.A VALE is scheduled to report first-quarter 2022 results on Apr 27, after the closing bell.

Q1 Estimates

The Zacks Consensus Estimate for Vale’s first-quarter total sales is pegged at $11.32 billion, indicating a decline of 10.4% from the year-ago quarter. The consensus mark for earnings has moved south by 9% to 90 cents over the past seven days. The figure suggests a slump of 20% from the prior-year quarter.

Q4 Results

Vale’s fourth-quarter earnings came in higher than the year-ago quarter while revenues were down. The company beat the Zacks Consensus Estimate on both the metrics. The company has surpassed earnings estimates in each of the trailing four quarters, the average surprise being 23.4%.

VALE S.A. Price and EPS Surprise

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

Factors to Note

Vale recently provided first-quarter 2022 production update, which offers a sneak peek as to how the company is likely to fare in the to-be-reported quarter. Iron ore production was around 63.9 million tons in the first quarter of 2022, down 6% year over year and 22.5% sequentially. The miner reported lower production primarily due to the heavy rainfall in Minas Gerais in January that halted the Southern and Southeastern Systems operations and the availability of third-party ore purchase for some time. Licensing delays at Serra Norte and lower-than-expected performance at S11D and Sossego led to lower output in the quarter to be reported. Major maintenance carried out during the quarter under discussion might have weighed on production as well.

Sales volumes of iron ore fines and pellets were 60.6 Mt in the quarter. It highlights a 35% slump from the first quarter of 2021. Iron accounts for around 80% of Vale’s revenues. Even though iron ore prices gained through the first quarter on the Russia-Ukraine conflict, this benefit might have been negated by Vale’s lower production numbers.

Production of nickel was down 5.4% year over year and 4.6% sequentially to 45.8 kt in January to March period. Unscheduled maintenance in Onça Puma electric furnace, ramping up at the Sudbury mines after the labor disruption, repairs at the Totten mine shaft, and the ramp-up of the VBME project led to lower production in the first quarter. Nickel sales were down 19% year over year and 13% sequentially to 39 kt due to the lower production.

Copper production for the quarter was down 26% year over year to 56.6 kt in the quarter, primarily due to scheduled SAG mill maintenance at Sossego. Vale sold 50.3 kt of copper, which reflects a 29% decline from the first quarter of 2021 due to the lower production in the quarter to be reported. Lower output of these metals might have offset the gains from higher metal prices.

Vale has been facing higher input costs, particularly of diesel and freight costs, which are likely to have weighed on its margins in the quarter to be reported. However, the company’s cost control efforts may have negated some of this impact.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Vale this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Vale is 0.00%.

Zacks Rank: The company currently has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

In a year’s time, shares of Vale have fallen 20.3%, compared with the industry’s decline of 20.2%.

Stocks Poised to Beat Estimates

Here are some companies worth considering as our model shows that they have the right combination of elements to beat on earnings this season:

The Mosaic Company MOS has an Earnings ESP of +0.89% and a Zacks Rank #1. The Zacks Consensus Estimate for the company's earnings for the first quarter of 2022 indicates year-over-year growth of 328%. The estimates have moved up 2.5% in the past 30 days.

Mosaic has a trailing four-quarter earnings surprise of 3.7%, on average. MOS’s shares have soared 102% in the past year.

Carpenter Technology CRS has an Earnings ESP of +10.99% and a Zacks Rank #2. The Zacks Consensus Estimate for the first quarter of 2022 suggests a loss of 30 cents.

Shares of Carpenter Technology have gained 11.1% over the past year. CRS' earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 21.8%.

Huntsman Corporation HUN has an Earnings ESP of +1.88% and a Zacks Rank #3. The Zacks Consensus Estimate for the company's earnings for the first quarter of 2022 indicates year-over-year growth of 51.5%. The estimate has moved up 2% over the past 30 days.

Shares of Huntsman have appreciated 27.6% over the past year. HUN's earnings beat the consensus mark in each of the trailing four quarters, the average surprise being 10.8%.

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