Comparing Gerdau (GGB) & Insteel Industries (IIIN)

Gerdau (NYSE: GGB) and Insteel Industries (NASDAQ:IIIN) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and target prices for Gerdau and Insteel Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gerdau 0 0 7 0 3.00
Insteel Industries 0 1 1 0 2.50

Gerdau currently has a consensus price target of $4.00, suggesting a potential upside of 4.71%. Insteel Industries has a consensus price target of $34.00, suggesting a potential upside of 4.84%. Given Insteel Industries’ higher probable upside, analysts plainly believe Insteel Industries is more favorable than Gerdau.

Insider and Institutional Ownership

4.1% of Gerdau shares are held by institutional investors. Comparatively, 83.2% of Insteel Industries shares are held by institutional investors. 0.0% of Gerdau shares are held by insiders. Comparatively, 5.7% of Insteel Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Gerdau pays an annual dividend of $0.05 per share and has a dividend yield of 1.3%. Insteel Industries pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%.

Profitability

This table compares Gerdau and Insteel Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gerdau -1.86% 4.01% 1.90%
Insteel Industries 6.18% 9.36% 7.21%

Volatility and Risk

Gerdau has a beta of 2.31, meaning that its stock price is 131% more volatile than the S&P 500. Comparatively, Insteel Industries has a beta of 2, meaning that its stock price is 100% more volatile than the S&P 500.

Valuation and Earnings

This table compares Gerdau and Insteel Industries’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gerdau $11.57 billion 0.57 -$112.55 million N/A N/A
Insteel Industries $388.87 million 1.59 $22.54 million N/A N/A

Insteel Industries has lower revenue, but higher earnings than Gerdau.

Summary

Insteel Industries beats Gerdau on 9 of the 14 factors compared between the two stocks.

About Gerdau

Gerdau S.A. provides steel-related products and services worldwide. It operates through four segments: Brazil Operations, North America Operations, South America Operations, and Special Steel Operations. The company offers semi-finished products, including billets, blooms, and slabs; common long rolled products, such as rebars, wire rods, merchant bars, light shapes, and profiles, which are used primarily in the construction and manufacturing industries; and drawn products comprising barbed and barbless fence wires, galvanized wires, fences, concrete reinforcing wire meshes, nails, and clamps, as well as mines and produces iron ore. It also produces special steel products for use in auto parts, light and heavy vehicles, and agricultural machinery, as well as the oil and gas, wind energy, machinery and equipment, mining and rail, and others markets. In addition, the company offers flat products comprising hot rolled coils and heavy plates; and resells flat steel products. It sells its products through independent distributors, direct sales from the mills, and its retail network. The company was founded in 1901 and is based in Sao Paulo, Brazil. Gerdau S.A. is a subsidiary of Metalurgica Gerdau S.A.

About Insteel Industries

Insteel Industries, Inc., together with its subsidiaries, manufactures and markets steel wire reinforcing products for concrete construction applications. The company markets prestressed concrete strand (PC strand) and welded wire reinforcement (WWR). Its PC strand is a seven-wire strand that is used to impart compression forces into precast concrete elements and structures providing reinforcement for bridges, parking decks, buildings, and other concrete structures. The company's WWR engineered reinforcing product is used in nonresidential and residential construction. It produces a range of WWR products, including engineered structural mesh (ESM), concrete pipe reinforcement (CPR), and standard welded wire reinforcement (SWWR). ESM is an engineered made-to-order product that is used as the primary reinforcement for concrete elements or structures serving as a reinforcing solution for hot-rolled rebar; CPR is an engineered made-to-order product that is used as the primary reinforcement in concrete pipe, box culverts, and precast manholes for drainage and sewage systems, water treatment facilities, and other related applications; and SWWR is a secondary reinforcing product for crack control applications in residential and light nonresidential construction, including driveways, sidewalks, and various slab-on-grade applications. The company sells its products through sales representatives to the manufacturers of concrete products, distributors, rebar fabricators, and contractors primarily in the United States, as well as in Canada, Mexico, and Central and South America. Insteel Industries, Inc. was founded in 1953 and is headquartered in Mount Airy, North Carolina.

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