VALE - Vale Stock: I Sense A Value Trap
2024-05-22 06:44:54 ET
Summary
- VALE stock trades at a low forward P/E of only 5.3x.
- However, market consensus expects a decline in VALE's EPS in the years ahead, leading to a higher implied FWD P/E.
- I see such a gloomy projection as quite plausible given China’s struggling economy and VALE’s large exposure to the China market.
VALE stock trades at 5x FWD P/E only
Vale S.A. ( VALE ) probably is on the radar of investors seeking deep-value investment opportunities. Indeed, the stock’s valuation metrics are extremely attractive both in absolute and relative standards. More specifically, the following chart below shows VALE’s valuation metrics in comparison to the sector median and also its historical averages. As you can see, the stock is currently trading at an FWD P/E of 5.3x only (on a non-GAAP basis). In contrast, the forward P/E for the sector has a median value of more than 17x. As such, VALE’s P/E multiple is almost only 1/3 of the sector median. Even when compared to its own historical average, the stock is trading at a noticeable discount of 6%~7% either by FWD GAAP P/E or non-GAAP P/E....
Vale Stock: I Sense A Value Trap