Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Ferrous Minerals and Base Metals segments. This week, I fundamentally analyze Vale’s stock. I review Vale’s operating segments, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account Vale’s 2020 free cash flow of $9,892 million figure, a 5% growth rate of FCF (growth for the next 10 years), 13% discount rate, 2.989% long term growth rate (growth from 10 year mark in the future to perpetuity), 4,932 million shares outstanding, and $14,569 million of long term debt, the DCF analysis yields us an intrinsic value of $19.94 per share.
0:24 Business Overview
4:09 Key Ratios Analysis
14:17 Discounted Cash Flow Analysis / Intrinsic Value
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Vale’s Website: here.
Morningstar Key Statistics Link: here.
Useful Resources here.
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