Public Joint Stock Company Severstal (OTCMKTS:SVJTY) and Gerdau (NYSE:GGB) Critical Analysis

Public Joint Stock Company Severstal (OTCMKTS:SVJTY) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Dividends

Public Joint Stock Company Severstal pays an annual dividend of $0.26 per share and has a dividend yield of 1.2%. Gerdau pays an annual dividend of $0.08 per share and has a dividend yield of 2.5%. Public Joint Stock Company Severstal pays out -23.9% 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.

Earnings and Valuation

This table compares Public Joint Stock Company Severstal and Gerdau”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Public Joint Stock Company Severstal	N/A	N/A	N/A	($1.09)	-20.14
Gerdau	$64.60 billion	0.11	$1.50 billion	$0.61	5.34

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

Insider & Institutional Ownership

3.8% of Public Joint Stock Company Severstal shares are owned by institutional investors. Comparatively, 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 hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Public Joint Stock Company Severstal and Gerdau’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Public Joint Stock Company Severstal	N/A	N/A	N/A
Gerdau	7.88%	8.43%	5.63%

Analyst Ratings

This is a summary of recent recommendations and price targets for Public Joint Stock Company Severstal and Gerdau, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Public Joint Stock Company Severstal	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 54.32%. Given Gerdau’s higher possible upside, analysts plainly believe Gerdau is more favorable than Public Joint Stock Company Severstal.

Summary

Gerdau beats Public Joint Stock Company Severstal on 10 of the 12 factors compared between the two stocks.

About Public Joint Stock Company Severstal

Public Joint Stock Company Severstal, together with its subsidiaries, manufactures and sells steel products. The company offers hot rolled steel, hot rolled products with a diamond-shaped and lentil-shaped corrugation, heavy plates, plates and tubes, hot rolled pickled steel, cold rolled steel, galvanized steel, galvanized steel with colored anti-corrosion coating, electric welded round steel tubes, shaped tubes, special tubes, large diameter pipes, steel plate for pipes, pies for oil platforms, steel plate for piles, and wind turbine towers. It also provides steel plate for wind turbine towers, wire rods, round bars, grinding balls, reinforcing bars, shaped rolled products, ropes, cold drawn steel and steel shaped profiles, steel fibre, cut wire shot, fasteners, meshes, nails, and wire, as well as pre-painted galvanized steel for roofing systems, sandwich panels, and facade solutions. Its products are used in construction, automotive, equipment for mining and transportation of bulk cargoes, lifting and rigging equipment, agricultural machinery, consumer good, and energy sectors. The company was formerly known as Open Joint-Stock Company Severstal and changed its name to Public Joint Stock Company Severstal in December 2014. Public Joint Stock Company Severstal was founded in 1955 and is headquartered in Moscow, Russia.

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.