We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Gerdau Closes Divestment of North American Assets to Optimus
Read MoreHide Full Article
Gerdau S.A. (GGB - Free Report) yesterday announced that it completed divesting some of the North American assets to Optimus Steel LLC. The deal was originally announced on Jan 31, 2018.
Optimus Steel LLC primarily focuses on providing its services for ship repair, structural work and pipe fabrications. It is associated with Wire Mesh Corp based in Jacksonville, FL.
Yesterday, the company ended the trading session at $4.67 per American Depository Receipts (ADR), up roughly 0.2% over the closing price a day earlier.
Details of the Deal
As revealed earlier, Gerdau’s divested assets included two downstream facilities — Carrollton Wire Products and Beaumont Wire Products — and Beaumont, Texas-based wire rod mill. The latter’s melt shop has annual steel production capacity of 700,000 tons and can produce coiled rebar and wire rod.
This divestment will enable the company to concentrate on its more profitable North American operations and provide better services to its wide customer base in the region.
The transaction, when announced in January 2018, was valued at approximately $92.5 million.
What Does the Divestment Mean for Gerdau?
Over time, Gerdau has been restructuring its business portfolio inorganically — roughly R$6 billion assets have been divested since 2014. In the first half of 2017, it divested the business unit — Premier Thermal Solutions, L.L.C. — to Z Capital Partners, L.L.C. while in October 2017, signed an agreement to sell its long steel industrial units in Chile.
Also, February this year, the company signed an agreement to sell two of its Goias-based hydroelectric power plants to Kinross Brasil Mineraçao. The transaction, valued at R$835 million, is anticipated to be completed in the coming three to six months. In January, it signed a definitive agreement to sell some of its U.S. rebar operations to Commercial Metals Company (CMC - Free Report) . The transaction, valued at approximately $600 million, is anticipated to be completed before the end of 2018.
These moves are aimed at strengthening the company’s core and profitable businesses as well as lowering debt burdens.
In fourth-quarter 2017, the company generated roughly 40.4% of its sales from the North America business division. Its long-term debt exiting the quarter was roughly R$14.5 billion while its net debt to earnings before interest, tax, depreciation and amortization ratio was 3.0 versus 3.4 in the previous quarter and 3.5 in the year-ago quarter.
The Brazilian steel maker’s ADR has gained roughly 12.8% in the last three months, outperforming 9% decline recorded by the industry it belongs to.
In the last 30 days, earnings estimates for both the stocks improved for the current year and the next year. Also, average positive earnings surprise for the last four quarters was 39.43% for ArcelorMittal and 6.49% for Steel Dynamics.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Gerdau Closes Divestment of North American Assets to Optimus
Gerdau S.A. (GGB - Free Report) yesterday announced that it completed divesting some of the North American assets to Optimus Steel LLC. The deal was originally announced on Jan 31, 2018.
Optimus Steel LLC primarily focuses on providing its services for ship repair, structural work and pipe fabrications. It is associated with Wire Mesh Corp based in Jacksonville, FL.
Yesterday, the company ended the trading session at $4.67 per American Depository Receipts (ADR), up roughly 0.2% over the closing price a day earlier.
Details of the Deal
As revealed earlier, Gerdau’s divested assets included two downstream facilities — Carrollton Wire Products and Beaumont Wire Products — and Beaumont, Texas-based wire rod mill. The latter’s melt shop has annual steel production capacity of 700,000 tons and can produce coiled rebar and wire rod.
This divestment will enable the company to concentrate on its more profitable North American operations and provide better services to its wide customer base in the region.
The transaction, when announced in January 2018, was valued at approximately $92.5 million.
What Does the Divestment Mean for Gerdau?
Over time, Gerdau has been restructuring its business portfolio inorganically — roughly R$6 billion assets have been divested since 2014. In the first half of 2017, it divested the business unit — Premier Thermal Solutions, L.L.C. — to Z Capital Partners, L.L.C. while in October 2017, signed an agreement to sell its long steel industrial units in Chile.
Also, February this year, the company signed an agreement to sell two of its Goias-based hydroelectric power plants to Kinross Brasil Mineraçao. The transaction, valued at R$835 million, is anticipated to be completed in the coming three to six months. In January, it signed a definitive agreement to sell some of its U.S. rebar operations to Commercial Metals Company (CMC - Free Report) . The transaction, valued at approximately $600 million, is anticipated to be completed before the end of 2018.
These moves are aimed at strengthening the company’s core and profitable businesses as well as lowering debt burdens.
In fourth-quarter 2017, the company generated roughly 40.4% of its sales from the North America business division. Its long-term debt exiting the quarter was roughly R$14.5 billion while its net debt to earnings before interest, tax, depreciation and amortization ratio was 3.0 versus 3.4 in the previous quarter and 3.5 in the year-ago quarter.
The Brazilian steel maker’s ADR has gained roughly 12.8% in the last three months, outperforming 9% decline recorded by the industry it belongs to.
Stocks to Consider
Two stocks worth considering in the industry are ArcelorMittal (MT - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
In the last 30 days, earnings estimates for both the stocks improved for the current year and the next year. Also, average positive earnings surprise for the last four quarters was 39.43% for ArcelorMittal and 6.49% for Steel Dynamics.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>