We issued an updated research report on premium industrial metals and minerals company, Vale S.A. (NYSE:VALE) , on Jun 14, 2016. Established in 1942, the company is currently the largest exporter as well as importer of iron ore and pellets in the global mining market. Over time, the firm has managed to significantly improve the scale of its business through robust growth strategies. However, Vale’s business is being affected by certain headwinds.
Scopes for Improvement
Vale has been improving its operational performance through initiatives to enhance productivity. The company aims to further improve its revenues and margins on the back of specialized cost-saving plans, new growth projects and superior mining yields, going forward. Moreover, efficient disinvestment programs and suitable capital deployment strategies should help the company stabilize its debt level in the coming quarters. Also, Vale’s investments in high-return growth opportunities should support its share buyback and dividend return programs in the near term.
Problems Faced by the Company
Vale operates in an extremely challenging macroeconomic environment. Soft demand from prominent industrial goods consumers like China has been adversely affecting the sales of mining giants like Vale. Moreover, volatility in the oil and financial markets raises macroeconomic risks for the company. In addition, the dismal commodity pricing environment continues to affect Vale’s top-line results. Moreover, the company’s business depends on licenses and permits issued by the government. Changes in government policies might lead to unfavorable developments in this regard. These, in turn, are likely to adversely impact the company’s growth or productivity plans, thereby directly affecting its revenues as well as margins.
Stocks to Consider
Vale presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Cliffs Natural Resources Inc. (NYSE:CLF) , First Majestic Silver Corp. (NYSE:AG) and Antofagasta (LON:ANTO) plc (OTC:ANFGY) . All the three stocks currently hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
CLIFFS NATURAL (CLF): Free Stock Analysis Report
VALE SA (VALE): Free Stock Analysis Report
FIRST MAJESTIC (AG): Free Stock Analysis Report
ANTOFAGASTA PLC (ANFGY): Free Stock Analysis Report
Original post
Zacks Investment Research