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Gerdau Fundamentally Strong: Should You Add the Stock?
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We issued an updated research report on Gerdau S.A. (GGB - Free Report) on Apr 5. The company is a leading steel producer in Brazil and one of the largest in the world. It currently has a market capitalization of $5.73 billion.
Year to date, Gerdau’s American Depository Receipts yielded a return of 7.32%, outperforming the gain of 4.80% recorded by the Zacks categorized Steel Producers industry.
Over the long term, solid product lines and manufacturing techniques will enable Gerdau to boost its growth opportunities. Also, the company is well positioned to reap benefits from a diversified business structure. For instance, the company derived nearly 30.1% of fourth-quarter 2016 net revenue from its Brazilian operations, 39.9% from the North American business and 12.2% from South America.
In addition, Gerdau’s strategy of disposing loss-making assets/businesses will enable it to focus on the profitable ones. For instance, the company completed the disposition of Spain-based special steel producer to Clerbil SL in 2016. In Mar 2017, it announced plans to divest its business unit, Premier Thermal Solutions, L.L.C, to Z Capital Partners, L.L.C. Also, recently, the company formed a joint venture with Putney Capital Management, primarily to optimize its asset base and improve profitability.
Going forward, any investments by the government for infrastructure improvements will boost steel demand in these regions, thereby creating lucrative market conditions for steel producers like Gerdau. For 2017, the company expects capital expenditure to be R$1.3 billion on productivity and maintenance enhancement.
POSCO’s earnings estimates for 2017 were revised upward over the last 60 days.
ArcelorMittal posted a positive average earnings surprise of 143.80%, over the last four quarters. Its earnings estimates for 2017 and 2018 improved over the last 60 days.
Nucor Corporation’s bottom-line estimates for 2017 and 2018 improved over the past 60 days. It reported an average positive earnings surprise of 7.65%, over the last four quarters.
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Gerdau Fundamentally Strong: Should You Add the Stock?
We issued an updated research report on Gerdau S.A. (GGB - Free Report) on Apr 5. The company is a leading steel producer in Brazil and one of the largest in the world. It currently has a market capitalization of $5.73 billion.
Year to date, Gerdau’s American Depository Receipts yielded a return of 7.32%, outperforming the gain of 4.80% recorded by the Zacks categorized Steel Producers industry.
Over the long term, solid product lines and manufacturing techniques will enable Gerdau to boost its growth opportunities. Also, the company is well positioned to reap benefits from a diversified business structure. For instance, the company derived nearly 30.1% of fourth-quarter 2016 net revenue from its Brazilian operations, 39.9% from the North American business and 12.2% from South America.
In addition, Gerdau’s strategy of disposing loss-making assets/businesses will enable it to focus on the profitable ones. For instance, the company completed the disposition of Spain-based special steel producer to Clerbil SL in 2016. In Mar 2017, it announced plans to divest its business unit, Premier Thermal Solutions, L.L.C, to Z Capital Partners, L.L.C. Also, recently, the company formed a joint venture with Putney Capital Management, primarily to optimize its asset base and improve profitability.
Going forward, any investments by the government for infrastructure improvements will boost steel demand in these regions, thereby creating lucrative market conditions for steel producers like Gerdau. For 2017, the company expects capital expenditure to be R$1.3 billion on productivity and maintenance enhancement.
Zacks Rank & Other Stocks to Consider
Gerdau currently carries a Zacks Rank #2 (Buy). Other stocks worth mentioning in the industry include POSCO (PKX - Free Report) , ArcelorMittal (MT - Free Report) and Nucor Corporation (NUE - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
POSCO’s earnings estimates for 2017 were revised upward over the last 60 days.
ArcelorMittal posted a positive average earnings surprise of 143.80%, over the last four quarters. Its earnings estimates for 2017 and 2018 improved over the last 60 days.
Nucor Corporation’s bottom-line estimates for 2017 and 2018 improved over the past 60 days. It reported an average positive earnings surprise of 7.65%, over the last four quarters.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>