GGB - Gerdau: Latin American Steelmaker Benefits From Tariff Hike (Rating Upgrade)

2025-06-04 12:04:28 ET

Summary

• Gerdau has nearly 50% of North America’s EBITDA, making it uniquely positioned to benefit from new tariffs on steel and aluminum.
• The stock trades at 4.79x EV/EBITDA vs. 10.2x the peer average, implying a strong upside if it is revalued.
• A 5% increase in steel prices could boost 2025 EBITDA by 12% to $1.79 billion due to high operating leverage.

Investment Thesis

I am raising my recommendation from hold to buy on Gerdau S.A. ( GGB ) shares. This article is a continuation of my initial coverage article published on May 7, 2024, with a hold recommendation....

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