Mining giant Vale S.A.’s VALE fourth-quarter 2017 adjusted earnings of 36 cents per share surpassed the Zacks Consensus Estimate of 23 cents. However, the bottom line came in lower than the year-ago tally of 52 cents per share.
For 2017, adjusted earnings came in at $1.35 per share, outpacing the Zacks Consensus Estimate of $1.22. The bottom line came in higher than the year-ago tally of 96 cents per share.
Inside the Headlines
Net operating revenues edged down 1.1% year over year to $9,167 million.
Of the total net operating revenues, sales of ferrous minerals accounted for 73.1%, coal contributed 4.4%, base metals comprised 21.8%, and the remaining 0.7% was sourced miscellaneously.
Geographically, 14.3% of revenues were generated from South America, 59.7% from Asia, 7% from North America, 13.7% from Europe, 3.3% from the Middle East, and 2% from Rest of the World.
Net operating revenues for 2017 came in at $33,967 million, up from $27,488 million recorded in the year-ago period. The upswing was primarily backed by a favorable pricing environment.
VALE S.A. Price, Consensus and EPS Surprise
VALE S.A. Price, Consensus and EPS Surprise | VALE S.A. Quote
Expenses
In the fourth quarter, cost of goods sold totaled $5,791 million, up 13.5% year over year. Gross profit margin came in at 36.8%, contracting 810 basis points (bps) year over year.
Selling, general and administrative expenditure was up 7.4% to $146 million, while research and development expenses dipped 7.1% to $104 million, both on a year-over-year basis.
Gross profit margin for 2017 came in at 38.1%, up 230 bps year over year.
Balance Sheet/Cash Flow
Vale exited the fourth quarter with cash and cash equivalents of $4,328 million compared with $4,262 million recorded in the prior-year period. Net debt in the quarter was $18,143 million, down from $25,042 million witnessed in the year-ago period.
In the reported quarter, net cash provided from operating activities came in at $4,298 million, as against $3,685 million recorded in the year-earlier quarter. Capital spending summed $977 million, as against $1,323 million recorded in fourth-quarter 2016.
Outlook
Vale intends to boost its near-term competency on the back of improved product prices, stronger mining productivity and new growth investments. This Zacks Rank #2 (Buy) stock intends to deleverage its balance sheet by lowering debt on the back of increased cash generation.
Other Stocks to Consider
Some other well-ranked stocks within the Zacks Basic Materials sector are listed below:
The Andersons, Inc. ANDE sports a Zacks Rank #1 (Strong Buy). The company has pulled off a positive average earnings surprise of 0.62% for the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allegheny Technologies Inc. ATI sports a Zacks Rank #1. The company has pulled off a positive average earnings surprise of 41.72% for the last four quarters.
Air Products and Chemicals, Inc. APD holds a Zacks Rank #2. The company has pulled off a positive average earnings surprise of 4.68% for the last four quarters.
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