Gerdau S.A. Common Stock (GGB)

FairStock Score: 38/100 — MIXED

Key Financials

Strengths

• Generates $715 million in annual free cash flow (8.3% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.29, providing financial flexibility
• Attractive 2.6% dividend yield providing steady income returns
• Established organization with 30,000 employees providing operational scale

Concerns

• Currently unprofitable—sustained losses could lead to dilutive capital raises or balance sheet deterioration
• Altman Z-Score of 1.1 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Gerdau S.A. Common Stock is a small-cap basic materials company valued at $8.6 billion. Revenue stands at $69.9 billion, though the company is currently unprofitable. From a quality standpoint, Gerdau shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of 1.1 warrants caution. On valuation, the stock is trading at a premium 30.8x earnings, with offers a 53% margin of safety vs Graham Number of $9. Growth dynamics show revenue growing at 0.9% and profit growth of -510.8%. The 2.6% dividend yield adds an income component for patient holders. Our composite FairStock Score of 38/100 reflects below-average fundamentals overall. Without profitability, this remains speculative—suitable only for those with high risk tolerance and a long time horizon.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $715 million in annual free cash flow (8.3% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 31x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer