Gerdau S.A. (NYSE:GGB) Short Interest Up 27.9% in April

Key Points

• Short interest rose 27.9% in April to 5,599,233 shares (about 0.3% of shares outstanding), though the short-interest ratio remains very low at 0.3 days based on average volume.
• Analysts have trended positive with several upgrades; Gerdau's consensus rating is a "Moderate Buy" and the average price target is $5.12.
• Company insiders have been selling (CEO Cunha sold 50,000 shares; insiders sold 208,026 shares over the last 90 days) and Gerdau missed quarterly EPS estimates ($0.10 vs. $0.15), while also raising the quarterly dividend to $0.0361 (annualized yield ~3.3%).

Gerdau S.A. (NYSE:GGB - Get Free Report) was the recipient of a large increase in short interest in April. As of April 15th, there was short interest totaling 5,599,233 shares, an increase of 27.9% from the March 31st total of 4,378,053 shares. Based on an average trading volume of 21,810,367 shares, the short-interest ratio is currently 0.3 days. Currently, 0.3% of the company's shares are sold short.

Analyst Ratings Changes

GGB has been the subject of several research analyst reports. Scotiabank upgraded shares of Gerdau from a "hold" rating to a "strong-buy" rating in a research note on Thursday, March 26th. JPMorgan Chase & Co. increased their target price on shares of Gerdau from $5.00 to $5.50 and gave the stock an "overweight" rating in a research note on Monday, April 13th. Weiss Ratings restated a "hold (c)" rating on shares of Gerdau in a report on Friday, March 27th. UBS Group reiterated a "buy" rating and set a $5.25 price objective (up from $4.60) on shares of Gerdau in a report on Wednesday. Finally, Itau BBA Securities raised shares of Gerdau from a "market perform" rating to an "outperform" rating and set a $4.60 price objective on the stock in a research report on Wednesday, April 1st. One investment analyst has rated the stock with a Strong Buy rating, three have given a Buy rating and two have assigned a Hold rating to the company. According to data from MarketBeat, Gerdau presently has an average rating of "Moderate Buy" and an average target price of $5.12.

Insiders Place Their Bets

In other news, CEO Cunha Gustavo Werneck Da sold 50,000 shares of the business's stock in a transaction dated Wednesday, April 8th. The stock was sold at an average price of $4.01, for a total value of $200,500.00. Following the transaction, the chief executive officer directly owned 138,080 shares of the company's stock, valued at $553,700.80. The trade was a 26.58% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, insider Chia Yuan Wang sold 34,000 shares of the firm's stock in a transaction that occurred on Wednesday, April 8th. The stock was sold at an average price of $4.00, for a total value of $136,000.00. Following the sale, the insider directly owned 193,895 shares of the company's stock, valued at $775,580. This represents a 14.92% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold 208,026 shares of company stock valued at $778,058 over the last 90 days. 0.02% of the stock is owned by company insiders.

Hedge Funds Weigh In On Gerdau

Several large investors have recently added to or reduced their stakes in the business. Bank of America Corp DE lifted its position in shares of Gerdau by 162.6% during the second quarter. Bank of America Corp DE now owns 12,984,389 shares of the basic materials company's stock valued at $37,914,000 after purchasing an additional 8,039,814 shares in the last quarter. Donald Smith & CO. Inc. increased its stake in Gerdau by 49.2% in the 4th quarter. Donald Smith & CO. Inc. now owns 24,211,588 shares of the basic materials company's stock valued at $89,341,000 after buying an additional 7,982,296 shares during the last quarter. Causeway Capital Management LLC increased its stake in Gerdau by 169.2% in the 3rd quarter. Causeway Capital Management LLC now owns 7,189,270 shares of the basic materials company's stock valued at $22,287,000 after buying an additional 4,519,092 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC lifted its position in shares of Gerdau by 821.1% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 2,344,175 shares of the basic materials company's stock worth $6,657,000 after buying an additional 2,089,675 shares in the last quarter. Finally, Jump Financial LLC purchased a new position in shares of Gerdau in the 4th quarter worth approximately $7,400,000. Institutional investors own 1.49% of the company's stock.

Gerdau Stock Down 1.7%

Shares of NYSE:GGB traded down $0.08 during trading on Wednesday, reaching $4.44. 20,858,245 shares of the stock were exchanged, compared to its average volume of 20,058,787. Gerdau has a 1-year low of $2.48 and a 1-year high of $4.66. The stock has a fifty day moving average of $3.86 and a two-hundred day moving average of $3.81. The company has a debt-to-equity ratio of 0.26, a current ratio of 2.89 and a quick ratio of 1.40. The firm has a market cap of $8.86 billion, a price-to-earnings ratio of 27.72 and a beta of 1.44.

Gerdau (NYSE:GGB - Get Free Report) last announced its quarterly earnings results on Monday, April 27th. The basic materials company reported $0.10 EPS for the quarter, missing analysts' consensus estimates of $0.15 by ($0.05). Gerdau had a net margin of 2.40% and a return on equity of 6.83%. The business had revenue of $3.22 billion for the quarter, compared to the consensus estimate of $3.29 billion. Research analysts anticipate that Gerdau will post 0.51 earnings per share for the current fiscal year.

Gerdau Increases Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Tuesday, June 16th. Stockholders of record on Friday, May 15th will be issued a dividend of $0.0361 per share. This is an increase from Gerdau's previous quarterly dividend of $0.02. This represents a $0.14 dividend on an annualized basis and a dividend yield of 3.3%. The ex-dividend date is Friday, May 15th. Gerdau's dividend payout ratio is 50.00%.

About Gerdau

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.

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