Analyzing Gerdau (NYSE:GGB) and Nippon Steel (OTCMKTS:NISTF)

Gerdau (NYSE:GGB) and Nippon Steel (OTCMKTS:NISTF) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, dividends, valuation, earnings, profitability, risk and institutional ownership.

Institutional & Insider Ownership

1.5% of Gerdau shares are owned by institutional investors. Comparatively, 11.4% of Nippon Steel shares are owned by institutional investors. 0.0% of Gerdau shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Gerdau and Nippon Steel”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gerdau	$64.60 billion	0.10	$1.50 billion	$0.61	5.13
Nippon Steel	N/A	N/A	N/A	$26.24	0.79

Gerdau has higher revenue and earnings than Nippon Steel. Nippon Steel is trading at a lower price-to-earnings ratio than Gerdau, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Gerdau and Nippon Steel, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gerdau	0	0	2	0	3.00
Nippon Steel	0	0	0	0	N/A

Gerdau presently has a consensus target price of $5.00, suggesting a potential upside of 59.74%. Given Gerdau’s higher probable upside, equities research analysts plainly believe Gerdau is more favorable than Nippon Steel.

Profitability

This table compares Gerdau and Nippon Steel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gerdau	7.88%	8.43%	5.63%
Nippon Steel	N/A	N/A	N/A

Summary

Gerdau beats Nippon Steel on 8 of the 10 factors compared between the two stocks.

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.

About Nippon Steel

Nippon Steel Corporation engages in steelmaking and steel fabrication, engineering and construction, chemicals and materials, and system solutions businesses in Japan and internationally. The company offers steel plates, sheets, and slags; bar and rod materials; structural steel; pipes and tubes; titanium and stainless products; and railway, automotive, and machinery parts for applications in automotive, energy, infrastructure, and consumer electronics markets. It is also involved in construction; waste processing and recycling; supplying electricity, gas, and heat; and the provision of coal-based chemical products, petrochemicals, electronic materials, materials and components for semiconductors and electronic parts, carbon fiber, and composite products. In addition, the company offers computer systems engineering and consulting, IT-enabled outsourcing, and other services. The company was formerly known as Nippon Steel & Sumitomo Metal Corporation and changed its name to Nippon Steel Corporation in April 2019. The company was incorporated in 1950 and is headquartered in Tokyo, Japan.