Critical Contrast: Gerdau (GGB) & Carpenter Technology Corporation (CRS)

Gerdau (NYSE: GGB) and Carpenter Technology Corporation (NYSE:CRS) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitabiliy, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Profitability

This table compares Gerdau and Carpenter Technology Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gerdau -5.25% -7.32% -3.41%
Carpenter Technology Corporation 2.08% 3.57% 1.44%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Gerdau and Carpenter Technology Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gerdau 0 2 2 0 2.50
Carpenter Technology Corporation 0 2 3 0 2.60

Carpenter Technology Corporation has a consensus target price of $43.00, indicating a potential upside of 10.34%. Given Carpenter Technology Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Carpenter Technology Corporation is more favorable than Gerdau.

Insider and Institutional Ownership

5.0% of Gerdau shares are owned by institutional investors. Comparatively, 95.0% of Carpenter Technology Corporation shares are owned by institutional investors. 0.0% of Gerdau shares are owned by insiders. Comparatively, 3.6% of Carpenter Technology Corporation 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.

Risk & Volatility

Gerdau has a beta of 2.33, meaning that its share price is 133% more volatile than the S&P 500. Comparatively, Carpenter Technology Corporation has a beta of 2.07, meaning that its share price is 107% more volatile than the S&P 500.

Valuation and Earnings

This table compares Gerdau and Carpenter Technology Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gerdau $11.32 billion 0.52 $1.15 billion N/A N/A
Carpenter Technology Corporation $1.75 billion 1.04 $204.20 million $0.78 49.96

Gerdau has higher revenue and earnings than Carpenter Technology Corporation.

Dividends

Gerdau pays an annual dividend of $0.01 per share and has a dividend yield of 0.3%. Carpenter Technology Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.8%. Carpenter Technology Corporation pays out 92.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Carpenter Technology Corporation beats Gerdau on 10 of the 15 factors compared between the two stocks.

Gerdau Company Profile

Gerdau S.A. (Gerdau) is a manufacturer of long steel in the North and South America. The Company is engaged in the production and commercialization of steel products in general, through its mills located in Argentina, Brazil, Canada, Chile, Colombia, Spain, the United States, Guatemala, India, Mexico, Peru, the Dominican Republic, Uruguay and Venezuela. Its segments are Brazil Operations, which includes operations of steel and iron ore in Brazil, except Special Steels, and the operation of metallurgical coal and coke in Colombia; North America Operations, which includes all operations in North America, except those of Mexico and Special Steels; South America Operations, which includes operations in South America, except Brazil and the operation of metallurgical coal and coke in Colombia, and Special Steel Operations, including special steel operations in Brazil, Spain, the United States and India. It supplies its customers a range of products, including iron ore semi-finished products.

Carpenter Technology Corporation Company Profile

Carpenter Technology Corporation is engaged in the manufacturing, fabrication and distribution of specialty metals. The Company’s segments include Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). Its SAO segment consists of alloy and stainless steel manufacturing operations. Its PEP segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business and the Latrobe and Mexico distribution businesses. It develops, manufactures and distributes cast/wrought and powder metal stainless steels, and special alloys, including high temperature (iron-nickel-cobalt base), stainless, corrosion resistant, controlled expansion alloys, ultra-high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys. The Company manufactures and rents down-hole drilling tools and components used in the oil and gas industry.

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