What Are the Fundamentals Of Gerdau (GGB)?

Now trading at a price of $5.82, Gerdau has moved 3.2% so far today on a volume of 2,335,211, compared to its average of 12,883,216. In contrast, the S&P 500 index moved 1.0%.

Gerdau shares moved 15.8% over the last 52 weeks, with a high of $6.62 and a low of $3.94. During this time, the stock underperformed the S&P 500 index by 34.4%. As of January 2022, the company's 50-day average price is $6.0. Gerdau S.A., together with its subsidiaries, operates as a steel producer company in the Americas. The mid-cap Basic Materials company has 30,000 full time employees and is based in São Paulo, Brazil. Gerdau has returned a 64.4% dividend yield over the last 12 months.

Exceptional EPS Growth with Low Leverage Levels:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $39,644 $43,815 $78,345
Revenue Growth n/a 10.52% 78.81%
Gross Margins 10.6% 13.5% 26.6%
Gross Margins Growth n/a 27.36% 97.04%
Operating Margins 8.1% 12.6% 25.6%
Operating Margins Growth n/a 55.56% 103.17%
Earnings Per Share $0.72 $1.4 $9.12
EPS Growth n/a 94.44% 551.43%
Free Cash Flow (MM) -$204 $4,603 $9,325
FCF Growth n/a 2354.98% 102.58%
Capital Expenditures (MM) -$1,847 -$1,805 -$3,192
Net Debt / EBITDA 2.79 1.68 0.42

The Market Is Undervaluing Gerdau:

Compared to the Basic Materials sector's average of 8.57, Gerdau has a trailing twelve month price to earnings (P/E) ratio of 3.9 and, based on its EPS guidance of 0.8, an expected P/E ratio of 7.3. The firm's price to earnings growth (PEG) is -5.06, however, which tells us that the company is expected to have negative growth in the future.

Gerdau is undervalued in terms of its assets because its price to book (P/B) ratio is 0.2 compared to its sector average of 1.86. The company's shares are currently trading -88.3% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 3.75 * 29.473) = $49.87

Gerdau Is the Subject of Mixed Market Indicators:

2 analysts are following Gerdau and have set target prices ranging from $7 to $7.3 per share. On average, they have given the company a rating of strong buy. At the current price of $5.82, GGB is trading -18.62% away from its average analyst target price of $7.15 per share, implying an analyst consensus of some upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.