Should Value Investors Buy Gerdau (GGB) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Gerdau (GGB) is a stock many investors are watching right now. GGB is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 6.79 right now. For comparison, its industry sports an average P/E of 8.36. Over the past 52 weeks, GGB's Forward P/E has been as high as 7.89 and as low as 3.51, with a median of 6.13.
GGB is also sporting a PEG ratio of 0.27. 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 has an average PEG of 0.61 right now. Over the last 12 months, GGB's PEG has been as high as 0.37 and as low as 0.17, with a median of 0.27.
Investors should also recognize that GGB has a P/B ratio of 1.05. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.63. Within the past 52 weeks, GGB's P/B has been as high as 1.22 and as low as 0.72, with a median of 0.94.
Finally, our model also underscores that GGB has a P/CF ratio of 3.48. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. GGB's P/CF compares to its industry's average P/CF of 8.48. GGB's P/CF has been as high as 3.51 and as low as 1.90, with a median of 2.65, all within the past year.
Steel Dynamics (STLD) may be another strong Steel - Producers stock to add to your shortlist. STLD is a # 2 (Buy) stock with a Value grade of A.
Furthermore, Steel Dynamics holds a P/B ratio of 2.21 and its industry's price-to-book ratio is 1.63. STLD's P/B has been as high as 3.02, as low as 1.60, with a median of 2.18 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Gerdau and Steel Dynamics are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GGB and STLD feels like a great value stock at the moment.
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Gerdau S.A. (GGB) : Free Stock Analysis Report
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
