Acerinox (OTCMKTS:ANIOY) and Gerdau (NYSE:GGB) Critical Contrast

Acerinox (OTCMKTS:ANIOY) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Valuation & Earnings

This table compares Acerinox and Gerdau”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Acerinox	$5.86 billion	N/A	$243.41 million	$0.19	35.16
Gerdau	$12.43 billion	0.53	$846.59 million	$0.29	11.28

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

Analyst Recommendations

This is a breakdown of current ratings for Acerinox and Gerdau, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acerinox	0	1	3	0	2.75
Gerdau	0	2	1	0	2.33

Gerdau has a consensus target price of $3.80, indicating a potential upside of 16.21%. Given Gerdau’s higher possible upside, analysts clearly believe Gerdau is more favorable than Acerinox.

Risk and Volatility

Acerinox has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Gerdau has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Institutional and Insider Ownership

1.5% of Gerdau shares are held by institutional investors. 0.0% of Gerdau shares are held 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.

Dividends

Acerinox pays an annual dividend of $0.22 per share and has a dividend yield of 3.3%. Gerdau pays an annual dividend of $0.08 per share and has a dividend yield of 2.4%. Acerinox pays out 115.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gerdau pays out 27.6% of its earnings in the form of a dividend.

Profitability

This table compares Acerinox and Gerdau’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Acerinox	1.59%	3.54%	1.41%
Gerdau	4.81%	6.51%	4.29%

Summary

Gerdau beats Acerinox on 11 of the 15 factors compared between the two stocks.

About Acerinox

Acerinox, S.A., together with its subsidiaries, manufactures, process, and markets stainless steel products in Spain, the United States, Africa, Asia, Rest of Europe, and internationally. It operates through Stainless steel, and High-performance Alloys segments. The company offers flat products, including hot and cold rolled coils and sheets, strips, flat bars, and discs, as well as engraved coil and sheet, black coil, slabs, circles, billets, and plates. It provides long products, which include wire and hexagonal wire rods, peeled bars, hot and cold reinforcement bars, black bars, profiles, angles, and steel profiles, as well as stainless steel, color coated, and reinforcement wires. In additions, it offers stainless steel products, such as austenitic, ferritic, duplex, and martensitic. Acerinox, S.A. was incorporated in 1970 and is headquartered in Madrid, Spain.

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.