Are Investors Undervaluing Gerdau (GGB) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Gerdau (GGB). GGB is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 6.83, while its industry has an average P/E of 9.33. GGB's Forward P/E has been as high as 7.89 and as low as 3.45, with a median of 5.41, all within the past year.
Investors will also notice that GGB has a PEG ratio of 0.32. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GGB's industry currently sports an average PEG of 0.71. Within the past year, GGB's PEG has been as high as 0.37 and as low as 0.16, with a median of 0.25.
Another valuation metric that we should highlight is GGB's P/B ratio of 1.16. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.57. Over the past year, GGB's P/B has been as high as 1.39 and as low as 0.72, with a median of 1.06.
Finally, investors should note that GGB has a P/CF ratio of 3.42. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.09. Within the past 12 months, GGB's P/CF has been as high as 3.53 and as low as 1.91, with a median of 2.73.
Usinas Siderurgicas de Minas Gerais (USNZY) may be another strong Steel - Producers stock to add to your shortlist. USNZY is a # 2 (Buy) stock with a Value grade of A.
Usinas Siderurgicas de Minas Gerais is trading at a forward earnings multiple of 12.44 at the moment, with a PEG ratio of 0.75. This compares to its industry's average P/E of 9.33 and average PEG ratio of 0.71.
Over the past year, USNZY's P/E has been as high as 15.30, as low as 2.68, with a median of 4.93; its PEG ratio has been as high as 0.75, as low as 0.16, with a median of 0.25 during the same time period.
Usinas Siderurgicas de Minas Gerais sports a P/B ratio of 0.18 as well; this compares to its industry's price-to-book ratio of 1.57. In the past 52 weeks, USNZY's P/B has been as high as 0.40, as low as 0.13, with a median of 0.18.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Gerdau and Usinas Siderurgicas de Minas Gerais are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GGB and USNZY feels like a great value stock at the moment.
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