Gerdau (NYSE:GGB) Shares Gap Down on Analyst Downgrade

Key Points

• Gerdau shares fell after Bank of America downgraded the stock from “buy” to “neutral,” opening at $4.29 versus a prior close of $4.46. Bank of America set a $5.10 price target, while analysts overall maintain a “Moderate Buy” consensus with a $5.24 target.
• Recent trading activity has been mixed: insiders sold 68,322 shares worth approximately $324,176 over the past three months, while several institutional investors—including Bank of America, UBS and Donald Smith—expanded their positions.
• Gerdau matched quarterly earnings expectations at $0.15 per share and exceeded revenue estimates with $3.45 billion. The company also increased its quarterly dividend to $0.0448 per share, representing a 4.1% annualized yield.

Gerdau S.A. (NYSE:GGB - Get Free Report) shares gapped down before the market opened on Thursday after Bank of America downgraded the stock from a buy rating to a neutral rating. The stock had previously closed at $4.46, but opened at $4.29. Bank of America now has a $5.10 price target on the stock. Gerdau shares last traded at $4.3250, with a volume of 3,789,417 shares traded.

Other research analysts have also recently issued reports about the stock. JPMorgan Chase & Co. increased their target price on shares of Gerdau from $5.50 to $6.00 and gave the stock an "overweight" rating in a report on Thursday, June 25th. Weiss Ratings raised shares of Gerdau from a "hold (c)" rating to a "hold (c+)" rating in a research report on Wednesday, August 5th. Itau BBA Securities lowered shares of Gerdau from an "outperform" rating to a "market perform" rating in a report on Monday, August 10th. Finally, UBS Group reissued a "buy" rating and issued a $5.25 price objective (up from $4.60) on shares of Gerdau in a research note on Wednesday, April 29th. One research analyst has rated the stock with a Strong Buy rating, two have assigned a Buy rating and four have given a Hold rating to the stock. Based on data from MarketBeat, the company presently has a consensus rating of "Moderate Buy" and a consensus price target of $5.24.

Insider Activity at Gerdau

In other Gerdau news, insider Chia Yuan Wang sold 30,935 shares of Gerdau stock in a transaction on Tuesday, June 2nd. The shares were sold at an average price of $4.49, for a total value of $138,898.15. The transaction was disclosed in a document filed with the SEC, which is available through this link. Also, CFO Rafael Dorneles Japur sold 10,000 shares of the company's stock in a transaction on Thursday, August 6th. The stock was sold at an average price of $5.10, for a total value of $51,000.00. Following the transaction, the chief financial officer directly owned 86,967 shares in the company, valued at approximately $443,531.70. The trade was a 10.31% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold a total of 68,322 shares of company stock valued at $324,176 over the last three months. Company insiders own 0.02% of the company's stock.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the business. UBS Group AG increased its holdings in shares of Gerdau by 45.1% during the fourth quarter. UBS Group AG now owns 3,034,398 shares of the basic materials company's stock valued at $11,197,000 after acquiring an additional 943,254 shares in the last quarter. Sei Investments Co. boosted its stake in Gerdau by 282.3% in the 1st quarter. Sei Investments Co. now owns 1,078,917 shares of the basic materials company's stock worth $3,895,000 after purchasing an additional 796,724 shares in the last quarter. Bank of America Corp DE boosted its stake in Gerdau by 11,393.6% in the 1st quarter. Bank of America Corp DE now owns 13,222,623 shares of the basic materials company's stock worth $47,734,000 after purchasing an additional 13,107,580 shares in the last quarter. Donald Smith & CO. Inc. grew its position in Gerdau by 49.2% during the 4th quarter. Donald Smith & CO. Inc. now owns 24,211,588 shares of the basic materials company's stock worth $89,341,000 after purchasing an additional 7,982,296 shares during the last quarter. Finally, Aquamarine Financial Cayman Ltd grew its position in Gerdau by 9.7% during the 4th quarter. Aquamarine Financial Cayman Ltd now owns 19,526,171 shares of the basic materials company's stock worth $72,052,000 after purchasing an additional 1,724,943 shares during the last quarter. 1.49% of the stock is owned by institutional investors and hedge funds.

Gerdau Price Performance

The company has a debt-to-equity ratio of 0.26, a quick ratio of 1.30 and a current ratio of 2.87. The firm has a market cap of $8.65 billion, a price-to-earnings ratio of 18.85 and a beta of 1.48. The stock's 50 day simple moving average is $4.58 and its 200-day simple moving average is $4.32.

Gerdau (NYSE:GGB - Get Free Report) last posted its quarterly earnings data on Tuesday, August 4th. The basic materials company reported $0.15 EPS for the quarter, hitting the consensus estimate of $0.15. Gerdau had a net margin of 3.37% and a return on equity of 7.97%. The business had revenue of $3.45 billion during the quarter, compared to the consensus estimate of $3.41 billion. Equities research analysts anticipate that Gerdau S.A. will post 0.53 EPS for the current fiscal year.

Gerdau Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Friday, September 18th. Shareholders of record on Friday, August 21st will be paid a dividend of $0.0448 per share. This represents a $0.18 annualized dividend and a yield of 4.1%. The ex-dividend date is Friday, August 21st. This is a boost from Gerdau's previous quarterly dividend of $0.04. Gerdau's dividend payout ratio (DPR) is presently 52.17%.

Gerdau Company Profile

Gerdau SA is a Brazilian-based steel producer engaged in the manufacture and distribution of long steel products for the construction, industrial and agricultural sectors. Established in 1901, the company operates an integrated network of electric-arc furnaces and rolling mills, producing reinforcement bars, wire rod, merchant bars and structural shapes. Gerdau's product portfolio also includes specialty long steel, high-yield reinforcement, rail, beams and steel coils, as well as value-added processing services such as cutting, bending and coating.

The company has expanded its footprint beyond Brazil, with significant operations in North America, South America and a presence in select European markets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source