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Fixing Vale’s Valuation
Vale (NYSE ticker: VALE) is a large Brazilian mining company. In Week 2 you saw that, based on
data up until 2014, an intrinsic business valuation resulted in a stock price of $49.47 per share.
However, the market price at that time was less than three times smaller, at just $14.17 per share.
Assume that Vale’s market valuation is correct: the fair price of the stock is in fact $14.17 per
share. Therefore, the $49.47 valuation done in Week 2 is missing one or more critical
elements of Vale’s business situation. Your job is to find and discuss these missing pieces,
and to reverse engineer Vale’s intrinsic valuation in order to obtain an intrinsic valuation of
$14.17 per share. The deliverable is a 2-4 page individual report containing your intrinsic
valuation and its rationale. Again, your intrinsic valuation must arrive at a price of $14.17 per
share, equal to the market price then.
Your project will most likely use knowledge of concepts studied in Week 2 and Week 5.
We are in 2021, so feel free to use the benefit of hindsight. However, your project should read as a
valuation performed in 2014 not in 2021. Specifically, you cannot explicitly use financial statements
or market information after 2013.