VALE stock has fallen 50% due to multiple factors, but there is potential for a 50% upside

From Nasdaq: 2024-12-09 22:40:19

VALE stock has plummeted almost 40% in 2024 due to China’s real estate crisis, legal issues, and poor nickel performance. However, at around $9.60 per share, there is potential for a 50% upside. Despite revenue declines, VALE’s P/S multiple has dropped to 1.14, offering upside potential compared to past levels.

VALE’s earnings have fallen sharply from $16.7 billion in 2022 to $7.9 billion in 2023, with revenues declining by 5%. The company’s stock returns were -2% in 2021, 32% in 2022, and 1% in 2023. VALE aims to optimize production and reduce costs, with growth projects underway to improve margins and portfolio quality.

In Q3 2024, VALE’s revenues dropped by 10% due to weak iron ore prices and higher freight costs. Operating profits were down 21%, but the company recorded its highest iron ore production since 2018. VALE is implementing a ‘Value over volume’ strategy, aiming to optimize production and reduce costs to improve margins in the long run.

VALE’s stock return in December 2024 was -35% YTD, compared to the S&P 500’s 28% gain. The Trefis Reinforced Value Portfolio had a 26% YTD return. Despite the decline in stock value, VALE is making progress with growth projects and expects an increase in world steel demand, driving a potential 50% increase in stock value.



Read more at Nasdaq: What’s Behind the 50% Fall in VALE Stock?