How the Wheels Came Off Vale's Bus

Seth Jayson, The Motley Fool
Updated

Vale (NYS: VALE) reported earnings on April 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Vale whiffed on revenues and earnings per share.

Compared to the prior-year quarter, revenue contracted significantly and GAAP earnings per share shrank significantly.


Margins shrank across the board.

Revenue details
Vale tallied revenue of $10.43 billion. The nine analysts polled by S&P Capital IQ expected a top line of $12.61 billion on the same basis. GAAP reported sales were 21% lower than the prior-year quarter's $13.54 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.68. The 10 earnings estimates compiled by S&P Capital IQ forecast $0.77 per share. GAAP EPS of $0.71 for Q1 were 46% lower than the prior-year quarter's $1.31 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 48.7%, 940 basis points worse than the prior-year quarter. Operating margin was 35.0%, 1,420 basis points worse than the prior-year quarter. Net margin was 34.3%, 1,700 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $14.07 billion. On the bottom line, the average EPS estimate is $0.82.

Next year's average estimate for revenue is $56.98 billion. The average EPS estimate is $3.47.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 6,469 members out of 6,629 rating the stock outperform, and 160 members rating it underperform. Among 1,269 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,237 give Vale a green thumbs-up, and 32 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Vale is outperform, with an average price target of $32.03.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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