Analyzing Gerdau (NYSE:GGB) and Norsk Hydro ASA (OTCMKTS:NHYDY)

Norsk Hydro ASA (OTCMKTS:NHYDY) and Gerdau (NYSE:GGB) are both materials companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Volatility & Risk

Norsk Hydro ASA has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, Gerdau has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500.

Earnings and Valuation

This table compares Norsk Hydro ASA and Gerdau”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norsk Hydro ASA	$20.05 billion	0.97	$647.52 million	$0.52	18.96
Gerdau	$12.51 billion	0.80	$248.41 million	$0.23	22.20

Norsk Hydro ASA has higher revenue and earnings than Gerdau. Norsk Hydro ASA 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 current ratings for Norsk Hydro ASA and Gerdau, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norsk Hydro ASA	2	7	2	1	2.17
Gerdau	0	6	2	1	2.44

Gerdau has a consensus price target of $5.57, indicating a potential upside of 9.21%. Given Gerdau’s stronger consensus rating and higher possible upside, analysts clearly believe Gerdau is more favorable than Norsk Hydro ASA.

Profitability

This table compares Norsk Hydro ASA and Gerdau’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norsk Hydro ASA	4.90%	11.46%	6.05%
Gerdau	3.37%	7.97%	5.18%

Dividends

Norsk Hydro ASA pays an annual dividend of $0.23 per share and has a dividend yield of 2.3%. Gerdau pays an annual dividend of $0.15 per share and has a dividend yield of 2.9%. Norsk Hydro ASA pays out 44.2% of its earnings in the form of a dividend. Gerdau pays out 65.2% 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.

Insider and Institutional Ownership

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

Summary

Norsk Hydro ASA beats Gerdau on 8 of the 14 factors compared between the two stocks.

About Norsk Hydro ASA

Norsk Hydro ASA engages in the power production, bauxite extraction, alumina refining, aluminium smelting, and recycling activities; and provision of extruded solutions worldwide. It operates through Hydro Bauxite & Alumina, Hydro Aluminium Metal, Hydro Metal Markets, Hydro Extrusions, and Hydro Energy segments. The Hydro Bauxite & Alumina segment engages in bauxite mining activities, production of alumina, and related commercial activities, primarily the sale of alumina. The Hydro Aluminium Metal segment is involved in the primary aluminum production casting activities. This segment principally offers extrusion ingots, foundry alloys, and sheet and standard ingots. The Metal Markets segment sells products from the company’s primary metal plants; operates recyclers; and trades in physical and financial metals. The Hydro Extrusions segment offers extrusion profiles, building systems, and precision tubing products for construction, automotive and heating, and ventilation and air conditioning sectors, as well as operates recycling facilities. The Hydro Energy segment engages in the trading and wholesale business in Brazil; energy sourcing operations; and operation of power stations in Norway, as well as renewable energy production, such as wind and solar, battery materials, and green hydrogen. Norsk Hydro ASA was founded in 1905 and is headquartered in Oslo, Norway.

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.