Comparing Gerdau (NYSE:GGB) and Eregli Demir ve Çelik Fabrikalari T.A.S. (OTC:ERELY)

Eregli Demir ve Çelik Fabrikalari T.A.S. (OTC:ERELY) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Dividends

Eregli Demir ve Çelik Fabrikalari T.A.S. pays an annual dividend of $1.33 per share and has a dividend yield of 17.3%. Gerdau pays an annual dividend of $0.08 per share and has a dividend yield of 2.5%. Eregli Demir ve Çelik Fabrikalari T.A.S. pays out 68.3% of its earnings in the form of a dividend. Gerdau pays out 13.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Eregli Demir ve Çelik Fabrikalari T.A.S. and Gerdau, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eregli Demir ve Çelik Fabrikalari T.A.S.	0	0	0	0	N/A
Gerdau	0	0	2	0	3.00

Gerdau has a consensus target price of $5.00, suggesting a potential upside of 56.25%. Given Gerdau’s higher possible upside, analysts plainly believe Gerdau is more favorable than Eregli Demir ve Çelik Fabrikalari T.A.S..

Earnings and Valuation

This table compares Eregli Demir ve Çelik Fabrikalari T.A.S. and Gerdau”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eregli Demir ve Çelik Fabrikalari T.A.S.	N/A	N/A	N/A	$1.95	3.94
Gerdau	$64.60 billion	0.10	$1.50 billion	$0.61	5.25

Gerdau has higher revenue and earnings than Eregli Demir ve Çelik Fabrikalari T.A.S.. Eregli Demir ve Çelik Fabrikalari T.A.S. is trading at a lower price-to-earnings ratio than Gerdau, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Eregli Demir ve Çelik Fabrikalari T.A.S. and Gerdau’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eregli Demir ve Çelik Fabrikalari T.A.S.	N/A	N/A	N/A
Gerdau	7.88%	8.43%	5.63%

Insider and Institutional Ownership

1.5% of Gerdau shares are owned by institutional investors. 0.0% of Gerdau shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Gerdau beats Eregli Demir ve Çelik Fabrikalari T.A.S. on 10 of the 12 factors compared between the two stocks.

About Eregli Demir ve Çelik Fabrikalari T.A.S.

Eregli Demir ve Çelik Fabrikalari T.A.S., together with its subsidiaries, produces and sells iron and steel rolled products, alloyed and non-alloyed iron, steel and pig iron castings, cast and pressed products, coke, and by-products in Turkey and internationally. Its flat products include hot rolled flat steel products, cold-rolled flat steel products, and galvanized/galvanealed flat steel products; and tin/chrome coated flat steel products used in metal packaging industry. The company also provides various byproducts, including motor benzole, pure benzole, toluol, xylol, crude tar, ammonium sulphate, iron sulphate, and granulated high furnace slag. In addition, it offers port services, such as loading and unloading, maritime, third party, warehouse, liquid and solid waste collection, maritime police, and customs and customs enforcement services. Further, the company engages in renewable energy production, recycling, and trading activities, as well as provision of management and consultancy services. It primarily serves automotive, white goods, pipes and tubes, rolling, manufacturing, electrics-electronics, mechanical engineering, energy, heating equipment, shipbuilding, defense, and packaging industries. The company was incorporated in 1960 and is headquartered in Istanbul, Turkey.

About Gerdau

Gerdau S.A., together with its subsidiaries, operates as a steel producer company. The company operates through Brazil Business, North America Business, South America Business, and Special Steel Business segments. It also provides semi-finished products, including billets, blooms, and slabs; common long rolled products, such as rebars, wire rods, merchant bars, light shapes, and profiles to the construction and manufacturing industries; drawn products comprising barbed and barbless fence wires, galvanized wires, fences, concrete reinforcing wire mesh, nails, and clamps for manufacturing, construction, and agricultural industries; and special steel products used in auto parts, light and heavy vehicles, and agricultural machinery, as well as in the oil and gas, wind energy, machinery and equipment, mining and rail, and other markets. In addition, the company offers flat products, such as hot-rolled steel coils and heavy plates; and resells flat steel products. Further, it operates mines that produce iron ore located in the Brazilian state of Minas Gerais. The company sells its products through independent distributors, direct sales from the mills, and its retail network. Gerdau S.A. was founded in 1901 and is based in São Paulo, Brazil.