GGB - Gerdau: Cheap Stock Void Of Direction

2024-05-08 12:46:31 ET

Summary

• Gerdau's stock is currently trading at a similar level to three years ago, indicating limited growth potential.
• The company is experiencing growth trends in multiple markets, including the North American market and the special steel market.
• Gerdau's valuation remains compelling, with attractive multiples and strong cash generation, but technical indicators suggest consolidation rather than a bullish move.

Intro

We wrote about Gerdau S.A. ( GGB ) in January of this year when we reiterated our 'Hold' rating in the Brazilian company. Increased competition in the Brazilian market, concerning technicals & adverse trends in shareholder returns (through lower associated buybacks & dividend payments) were beginning to make themselves known at the time. Furthermore, profitability from an EBITDA & gross margin standpoint was under pressure somewhat in Q4 over a comparable basis, which resulted in us standing pat on our 'Hold' rating....

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