Intrinsic value of Vale ADR - VALE

Previous Close

$14.93

  Intrinsic Value

$69.94

stock screener

  Rating & Target

str. buy

+368%

Previous close

$14.93

 
Intrinsic value

$69.94

 
Up/down potential

+368%

 
Rating

str. buy

We calculate the intrinsic value of VALE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  23.60
  21.74
  20.07
  18.56
  17.20
  15.98
  14.88
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
  6.48
  6.34
  6.20
  6.08
  5.97
  5.88
Revenue, $m
  41,983
  51,110
  61,366
  72,755
  85,272
  98,901
  113,622
  129,411
  146,244
  164,094
  182,941
  202,766
  223,556
  245,303
  268,006
  291,670
  316,306
  341,933
  368,576
  396,266
  425,040
  454,942
  486,022
  518,335
  551,942
  586,910
  623,308
  661,215
  700,713
  741,887
Variable operating expenses, $m
  16,635
  20,067
  23,923
  28,205
  32,911
  38,036
  43,571
  49,508
  55,836
  62,548
  68,785
  76,239
  84,056
  92,233
  100,769
  109,667
  118,930
  128,566
  138,583
  148,994
  159,813
  171,057
  182,743
  194,892
  207,528
  220,676
  234,362
  248,615
  263,465
  278,947
Fixed operating expenses, $m
  9,819
  10,035
  10,256
  10,482
  10,712
  10,948
  11,189
  11,435
  11,687
  11,944
  12,207
  12,475
  12,750
  13,030
  13,317
  13,610
  13,909
  14,215
  14,528
  14,847
  15,174
  15,508
  15,849
  16,198
  16,554
  16,918
  17,290
  17,671
  18,060
  18,457
Total operating expenses, $m
  26,454
  30,102
  34,179
  38,687
  43,623
  48,984
  54,760
  60,943
  67,523
  74,492
  80,992
  88,714
  96,806
  105,263
  114,086
  123,277
  132,839
  142,781
  153,111
  163,841
  174,987
  186,565
  198,592
  211,090
  224,082
  237,594
  251,652
  266,286
  281,525
  297,404
Operating income, $m
  15,529
  21,008
  27,187
  34,068
  41,648
  49,917
  58,862
  68,469
  78,721
  89,602
  101,949
  114,052
  126,750
  140,040
  153,920
  168,394
  183,467
  199,153
  215,465
  232,424
  250,052
  268,378
  287,431
  307,245
  327,860
  349,315
  371,656
  394,930
  419,188
  444,483
EBITDA, $m
  20,693
  27,111
  34,344
  42,396
  51,262
  60,932
  71,390
  82,619
  94,601
  107,317
  120,752
  134,892
  149,728
  165,253
  181,466
  198,372
  215,978
  234,297
  253,348
  273,152
  293,738
  315,137
  337,384
  360,520
  384,589
  409,639
  435,721
  462,890
  491,208
  520,735
Interest expense (income), $m
  1,948
  5,718
  8,663
  11,992
  15,734
  19,889
  24,455
  29,427
  34,797
  40,557
  46,698
  53,210
  60,085
  67,317
  74,902
  82,835
  91,117
  99,750
  108,738
  118,087
  127,806
  137,907
  148,404
  159,313
  170,651
  182,439
  194,699
  207,456
  220,734
  234,563
  248,972
Earnings before tax, $m
  9,811
  12,346
  15,195
  18,335
  21,760
  25,462
  29,436
  33,672
  38,163
  42,905
  48,740
  53,967
  59,433
  65,138
  71,085
  77,276
  83,717
  90,415
  97,378
  104,618
  112,145
  119,973
  128,118
  136,594
  145,421
  154,616
  164,201
  174,196
  184,625
  195,512
Tax expense, $m
  2,649
  3,333
  4,103
  4,950
  5,875
  6,875
  7,948
  9,091
  10,304
  11,584
  13,160
  14,571
  16,047
  17,587
  19,193
  20,865
  22,604
  24,412
  26,292
  28,247
  30,279
  32,393
  34,592
  36,880
  39,264
  41,746
  44,334
  47,033
  49,849
  52,788
Net income, $m
  7,162
  9,012
  11,092
  13,384
  15,885
  18,588
  21,488
  24,580
  27,859
  31,320
  35,580
  39,396
  43,386
  47,551
  51,892
  56,412
  61,113
  66,003
  71,086
  76,371
  81,866
  87,580
  93,526
  99,714
  106,157
  112,870
  119,866
  127,163
  134,776
  142,723

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  122,758
  149,446
  179,433
  212,735
  249,333
  289,184
  332,228
  378,396
  427,613
  479,807
  534,915
  592,883
  653,672
  717,261
  783,644
  852,836
  924,872
  999,805
  1,077,707
  1,158,671
  1,242,806
  1,330,240
  1,421,117
  1,515,600
  1,613,867
  1,716,110
  1,822,539
  1,933,378
  2,048,867
  2,169,260
Adjusted assets (=assets-cash), $m
  122,758
  149,446
  179,433
  212,735
  249,333
  289,184
  332,228
  378,396
  427,613
  479,807
  534,915
  592,883
  653,672
  717,261
  783,644
  852,836
  924,872
  999,805
  1,077,707
  1,158,671
  1,242,806
  1,330,240
  1,421,117
  1,515,600
  1,613,867
  1,716,110
  1,822,539
  1,933,378
  2,048,867
  2,169,260
Revenue / Adjusted assets
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
Average production assets, $m
  72,925
  88,779
  106,593
  126,376
  148,117
  171,791
  197,362
  224,788
  254,025
  285,031
  317,768
  352,205
  388,317
  426,092
  465,527
  506,631
  549,424
  593,938
  640,216
  688,313
  738,294
  790,234
  844,220
  900,349
  958,724
  1,019,462
  1,082,687
  1,148,531
  1,217,138
  1,288,658
Working capital, $m
  -1,050
  -1,278
  -1,534
  -1,819
  -2,132
  -2,473
  -2,841
  -3,235
  -3,656
  -4,102
  -4,574
  -5,069
  -5,589
  -6,133
  -6,700
  -7,292
  -7,908
  -8,548
  -9,214
  -9,907
  -10,626
  -11,374
  -12,151
  -12,958
  -13,799
  -14,673
  -15,583
  -16,530
  -17,518
  -18,547
Total debt, $m
  39,021
  54,019
  70,872
  89,588
  110,156
  132,552
  156,743
  182,689
  210,349
  239,683
  270,653
  303,231
  337,395
  373,132
  410,439
  449,325
  489,809
  531,921
  575,703
  621,204
  668,488
  717,626
  768,699
  821,798
  877,024
  934,485
  994,298
  1,056,590
  1,121,494
  1,189,155
Total liabilities, $m
  68,990
  83,988
  100,841
  119,557
  140,125
  162,521
  186,712
  212,658
  240,318
  269,652
  300,622
  333,200
  367,364
  403,101
  440,408
  479,294
  519,778
  561,890
  605,672
  651,173
  698,457
  747,595
  798,668
  851,767
  906,993
  964,454
  1,024,267
  1,086,559
  1,151,463
  1,219,124
Total equity, $m
  53,768
  65,457
  78,592
  93,178
  109,208
  126,663
  145,516
  165,737
  187,294
  210,156
  234,293
  259,683
  286,309
  314,160
  343,236
  373,542
  405,094
  437,915
  472,036
  507,498
  544,349
  582,645
  622,449
  663,833
  706,874
  751,656
  798,272
  846,820
  897,404
  950,136
Total liabilities and equity, $m
  122,758
  149,445
  179,433
  212,735
  249,333
  289,184
  332,228
  378,395
  427,612
  479,808
  534,915
  592,883
  653,673
  717,261
  783,644
  852,836
  924,872
  999,805
  1,077,708
  1,158,671
  1,242,806
  1,330,240
  1,421,117
  1,515,600
  1,613,867
  1,716,110
  1,822,539
  1,933,379
  2,048,867
  2,169,260
Debt-to-equity ratio
  0.730
  0.830
  0.900
  0.960
  1.010
  1.050
  1.080
  1.100
  1.120
  1.140
  1.160
  1.170
  1.180
  1.190
  1.200
  1.200
  1.210
  1.210
  1.220
  1.220
  1.230
  1.230
  1.230
  1.240
  1.240
  1.240
  1.250
  1.250
  1.250
  1.250
Adjusted equity ratio
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,162
  9,012
  11,092
  13,384
  15,885
  18,588
  21,488
  24,580
  27,859
  31,320
  35,580
  39,396
  43,386
  47,551
  51,892
  56,412
  61,113
  66,003
  71,086
  76,371
  81,866
  87,580
  93,526
  99,714
  106,157
  112,870
  119,866
  127,163
  134,776
  142,723
Depreciation, amort., depletion, $m
  5,164
  6,102
  7,157
  8,327
  9,614
  11,014
  12,527
  14,150
  15,880
  17,715
  18,803
  20,841
  22,977
  25,213
  27,546
  29,978
  32,510
  35,144
  37,883
  40,729
  43,686
  46,759
  49,954
  53,275
  56,729
  60,323
  64,064
  67,960
  72,020
  76,252
Funds from operations, $m
  12,326
  15,115
  18,249
  21,712
  25,498
  29,602
  34,016
  38,731
  43,740
  49,035
  54,383
  60,236
  66,363
  72,764
  79,438
  86,390
  93,624
  101,147
  108,969
  117,100
  125,552
  134,340
  143,480
  152,989
  162,886
  173,193
  183,931
  195,123
  206,796
  218,975
Change in working capital, $m
  -200
  -228
  -256
  -285
  -313
  -341
  -368
  -395
  -421
  -446
  -471
  -496
  -520
  -544
  -568
  -592
  -616
  -641
  -666
  -692
  -719
  -748
  -777
  -808
  -840
  -874
  -910
  -948
  -987
  -1,029
Cash from operations, $m
  12,527
  15,343
  18,505
  21,996
  25,811
  29,943
  34,384
  39,125
  44,160
  49,482
  54,854
  60,732
  66,883
  73,307
  80,006
  86,981
  94,240
  101,788
  109,635
  117,792
  126,271
  135,087
  144,257
  153,797
  163,727
  174,067
  184,841
  196,071
  207,783
  220,005
Maintenance CAPEX, $m
  -3,491
  -4,315
  -5,253
  -6,307
  -7,478
  -8,764
  -10,165
  -11,678
  -13,301
  -15,031
  -16,866
  -18,803
  -20,841
  -22,977
  -25,213
  -27,546
  -29,978
  -32,510
  -35,144
  -37,883
  -40,729
  -43,686
  -46,759
  -49,954
  -53,275
  -56,729
  -60,323
  -64,064
  -67,960
  -72,020
New CAPEX, $m
  -13,935
  -15,854
  -17,814
  -19,783
  -21,741
  -23,674
  -25,571
  -27,426
  -29,237
  -31,006
  -32,737
  -34,436
  -36,112
  -37,775
  -39,435
  -41,104
  -42,793
  -44,514
  -46,278
  -48,097
  -49,981
  -51,940
  -53,986
  -56,128
  -58,375
  -60,738
  -63,225
  -65,845
  -68,607
  -71,520
Cash from investing activities, $m
  -17,426
  -20,169
  -23,067
  -26,090
  -29,219
  -32,438
  -35,736
  -39,104
  -42,538
  -46,037
  -49,603
  -53,239
  -56,953
  -60,752
  -64,648
  -68,650
  -72,771
  -77,024
  -81,422
  -85,980
  -90,710
  -95,626
  -100,745
  -106,082
  -111,650
  -117,467
  -123,548
  -129,909
  -136,567
  -143,540
Free cash flow, $m
  -4,899
  -4,826
  -4,562
  -4,094
  -3,408
  -2,495
  -1,352
  21
  1,622
  3,444
  5,251
  7,493
  9,930
  12,555
  15,358
  18,331
  21,468
  24,763
  28,212
  31,812
  35,562
  39,461
  43,511
  47,715
  52,076
  56,600
  61,293
  66,162
  71,216
  76,465
Issuance/(repayment) of debt, $m
  13,264
  14,998
  16,853
  18,716
  20,568
  22,396
  24,191
  25,946
  27,660
  29,333
  30,971
  32,578
  34,164
  35,737
  37,307
  38,886
  40,484
  42,112
  43,781
  45,502
  47,284
  49,138
  51,073
  53,099
  55,226
  57,461
  59,813
  62,292
  64,905
  67,661
Issuance/(repurchase) of shares, $m
  3,148
  2,677
  2,042
  1,202
  145
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  16,412
  17,675
  18,895
  19,918
  20,713
  22,396
  24,191
  25,946
  27,660
  29,333
  30,971
  32,578
  34,164
  35,737
  37,307
  38,886
  40,484
  42,112
  43,781
  45,502
  47,284
  49,138
  51,073
  53,099
  55,226
  57,461
  59,813
  62,292
  64,905
  67,661
Total cash flow (excl. dividends), $m
  11,513
  12,849
  14,333
  15,823
  17,305
  19,901
  22,839
  25,967
  29,282
  32,778
  36,222
  40,071
  44,094
  48,292
  52,665
  57,217
  61,952
  66,876
  71,994
  77,314
  82,846
  88,599
  94,584
  100,814
  107,302
  114,061
  121,106
  128,454
  136,121
  144,126
Retained Cash Flow (-), $m
  -10,310
  -11,689
  -13,135
  -14,586
  -16,030
  -17,455
  -18,853
  -20,221
  -21,557
  -22,861
  -24,137
  -25,390
  -26,626
  -27,852
  -29,076
  -30,306
  -31,552
  -32,821
  -34,121
  -35,462
  -36,851
  -38,296
  -39,804
  -41,384
  -43,041
  -44,782
  -46,616
  -48,548
  -50,584
  -52,732
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,203
  1,160
  1,199
  1,237
  1,276
  2,446
  3,985
  5,746
  7,725
  9,916
  12,085
  14,681
  17,468
  20,440
  23,589
  26,911
  30,401
  34,055
  37,872
  41,852
  45,995
  50,303
  54,780
  59,431
  64,261
  69,278
  74,490
  79,906
  85,537
  91,393
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  1,153
  1,062
  1,043
  1,019
  989
  1,775
  2,692
  3,591
  4,438
  5,199
  5,739
  6,265
  6,642
  6,862
  6,925
  6,839
  6,615
  6,272
  5,831
  5,318
  4,757
  4,174
  3,590
  3,027
  2,500
  2,021
  1,599
  1,236
  934
  688
Current shareholders' claim on cash, %
  90.6
  84.6
  81.0
  79.3
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1
  79.1

Vale S.A. is a global producer of iron ore and iron ore pellets, key raw materials for steelmaking, and producer of nickel. The Company also produces copper, metallurgical and thermal coal, potash, phosphates and other fertilizer nutrients, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The Company's segments include Ferrous minerals, which comprises the production and extraction of ferrous minerals, as iron ore fines, iron ore pellets and its logistic services, manganese and ferroalloys and others ferrous products and services; Coal, which comprises the extraction of metallurgical and thermal coal and its logistic services; Base metals, which includes the production and extraction of non-ferrous minerals, and are presented as nickel and its byproducts, and copper (copper concentrated), and Others, which comprises sales and expenses of other products, services and investments in joint ventures and associate in other business.

FINANCIAL RATIOS  of  Vale ADR (VALE)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 2.6
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 11.2
Price to Free Cash Flow 56.7
Growth Rates
Sales Growth Rate 21.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.6%
Cap. Spend. - 3 Yr. Gr. Rate -16.7%
Financial Strength
Quick Ratio 3
Current Ratio 0.8
LT Debt to Equity 70.9%
Total Debt to Equity 75.1%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital 5.7%
Ret/ On T. Cap. - 3 Yr. Avg. -3.6%
Return On Equity 10.3%
Return On Equity - 3 Yr. Avg. -5.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 35.8%
Gross Margin - 3 Yr. Avg. 29.7%
EBITDA Margin 47.9%
EBITDA Margin - 3 Yr. Avg. 3.5%
Operating Margin 21.9%
Oper. Margin - 3 Yr. Avg. 3.5%
Pre-Tax Margin 28.6%
Pre-Tax Margin - 3 Yr. Avg. -15.7%
Net Profit Margin 14.1%
Net Profit Margin - 3 Yr. Avg. -13.8%
Effective Tax Rate 35.4%
Eff/ Tax Rate - 3 Yr. Avg. 41.9%
Payout Ratio 13.7%

VALE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VALE stock intrinsic value calculation we used $33967 million for the last fiscal year's total revenue generated by Vale ADR. The default revenue input number comes from 0001 income statement of Vale ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our VALE stock valuation model: a) initial revenue growth rate of 23.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for VALE is calculated based on our internal credit rating of Vale ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Vale ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of VALE stock the variable cost ratio is equal to 40.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9608 million in the base year in the intrinsic value calculation for VALE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 22.2% for Vale ADR.

Corporate tax rate of 27% is the nominal tax rate for Vale ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the VALE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for VALE are equal to 173.7%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Vale ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for VALE is equal to -2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $43458 million for Vale ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1272.65 million for Vale ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Vale ADR at the current share price and the inputted number of shares is $19.0 billion.

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COMPANY NEWS

▶ Value Investors Are Piling Into This Stock   [Nov-08-18 09:35AM  Insider Monkey]
▶ The Future of the Car May Be Older Than the Model T   [Oct-21-18 06:00AM  Bloomberg]
▶ Is Vale S.A. a Buy?   [Oct-19-18 06:02AM  Motley Fool]
▶ Rising Iron-Ore Prices Seem to Defy Economic Logic   [Oct-17-18 05:00PM  Bloomberg]
▶ PRESS DIGEST- Financial Times - Oct 12   [Oct-11-18 08:32PM  Reuters]
▶ Stock Market Turns Ugly At Midday; This Oil Stock Breaks Out   [Oct-08-18 12:17PM  Investor's Business Daily]
▶ Apple Pushes Toward $1.25 Trillion Value As These 4 New Sectors Lift Stocks   [Oct-03-18 01:39PM  Investor's Business Daily]
▶ Ken Heebner Trims Citigroup, Vale Positions   [Aug-20-18 05:36PM  GuruFocus.com]
▶ Yuan, Is 7 the Magic Number?   [Aug-06-18 07:47AM  TheStreet.com]
▶ Why This Gold and Silver Company Is Shifting Gears   [Jul-09-18 08:00AM  Motley Fool]
▶ PRESS DIGEST- Financial Times - June 26   [Jun-25-18 07:34PM  Reuters]
▶ Battery Boom Drives Vale to Sign Major Cobalt Deal   [Jun-14-18 08:21PM  Bloomberg Video]
▶ Vale Reaches $700 Million Deal to Sell Cobalt Output   [Jun-08-18 06:23PM  Bloomberg]
▶ Emerging Market Seesaw Puts Investors on Defensive   [Jun-05-18 03:58PM  Barrons.com]
▶ Which Mining Company Is the Best Dividend Stock?   [May-23-18 07:18AM  Motley Fool]
▶ Cobalt Streaming Deal Could Be the First in a Flood   [May-22-18 06:23PM  Bloomberg]
▶ An International Energy Bonanza   [11:13AM  Motley Fool]
▶ Should Vale SA. (NYSE:VALE) Be Part Of Your Portfolio?   [May-21-18 08:59AM  Simply Wall St.]

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