Vale S.A (VALE) will report its third-quarter 2011 earnings on Wednesday, October 26, 2011 after market closes.
The current Zacks Consensus Estimate for earnings per share (EPS) is $1.31, representing an annualized growth of 16.26%.
With respect to earnings surprises, over the trailing four quarters, Valeperformed in line withthe Zacks Consensus Estimate in two quarters, while underperformed in the remaining two. The average earnings surprise was a negative 9.02%, implying that the company underperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.
Second Quarter Highlights
The company’s net earnings in the quarter were $1.22 per ADR, up 74.3% compared with 70 cents per ADR in the year-ago quarter. Strong worldwide demand and high prices of minerals and metals along with appreciation of Brazilian real, against the US dollar impacted net earnings positively. The net earnings per share missed the Zacks Consensus Estimate of $1.40 per ADR.
Gross operating revenue jumped 54.5% year over year to $15,345 million and registered a sequential growth of 13.4%. The operating revenue set record of the highest quarterly result in Vale’s history. Rise in sales prices and volume growth of bulk material due to larger shipments has fuelled in such revenue rise. The recorded revenue, however, missed the Zacks Revenue Estimate of $17,688 million.
Agreement of Estimate Revisions
In the last 30 days, none of the analyst providing estimates increased the company’s earnings per share (EPS) estimates, while one decreased the same for the third quarter. One analyst increased the EPS estimate for the next quarter. For fiscal 2011, one analyst increased its estimate and one increased the same for fiscal 2012.
Magnitude of Estimate Revisions
Estimates over the last 30 days plummeted from $1.37 per share to the current $1.31 per share for the third quarter of 2011, representing a year-over-year growth of 16.26%.
Estimate for fiscal 2011 also decreased from $5.15 to $5.08 over the last 30 days while that for fiscal 2012 showed a similar trend of decrease from $5.14 to $5.02. These estimates represented a year-over-year growth of 56.24% for 2011 and a negative 1.17% for 2012.
Our Take
Vale is likely to post impressive results in the third quarter based on the rising worldwide metals and mineral prices accelerated by the industrial expansion among the emerging nations. Moreover, continued urbanization in Japan, and China along with worldwide rising demand for stainless steel and base metals show positive indication of improved performance, going forward.
Brazil-based Vale S.A. is one of the world’s largest producers and exporters of iron ore and pellets. The company keeps improvising its competitiveness against rival companies like Rio Tinto plc (RIO) and BHP Billiton Ltd (BHP).
We currently maintain a long-term Neutral recommendation on the stock. Vale has a Zacks # 3 Rank, which translates into a short-term Hold rating (1-3 months).
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