Investors interested in stocks from the Steel - Producers sector have probably already heard of Gerdau (GGB) and Nucor (NUE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Gerdau and Nucor are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GGB has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
GGB currently has a forward P/E ratio of 5.22, while NUE has a forward P/E of 8.40. We also note that GGB has a PEG ratio of 0.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NUE currently has a PEG ratio of 0.70.
Another notable valuation metric for GGB is its P/B ratio of 0.48. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NUE has a P/B of 0.87.
These are just a few of the metrics contributing to GGB's Value grade of B and NUE's Value grade of C.
GGB is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GGB is likely the superior value option right now.
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Gerdau S.A. (GGB) : Free Stock Analysis Report
Nucor Corporation (NUE) : Free Stock Analysis Report
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