Head to Head Contrast: Gerdau (NYSE:GGB) versus Public Joint Stock Company Severstal (OTCMKTS:SVJTY)

Gerdau (NYSE:GGB) and Public Joint Stock Company Severstal (OTCMKTS:SVJTY) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Gerdau and Public Joint Stock Company Severstal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gerdau	0	0	2	0	3.00
Public Joint Stock Company Severstal	0	0	0	0	N/A

Gerdau currently has a consensus target price of $5.00, indicating a potential upside of 56.49%. Given Gerdau’s higher possible upside, research analysts plainly believe Gerdau is more favorable than Public Joint Stock Company Severstal.

Valuation & Earnings

This table compares Gerdau and Public Joint Stock Company Severstal”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gerdau	$64.60 billion	0.10	$1.50 billion	$0.61	5.24
Public Joint Stock Company Severstal	N/A	N/A	N/A	($1.09)	-20.14

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

Institutional & Insider Ownership

1.5% of Gerdau shares are owned by institutional investors. Comparatively, 3.8% of Public Joint Stock Company Severstal shares are owned by institutional investors. 0.0% of Gerdau shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Gerdau and Public Joint Stock Company Severstal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gerdau	7.88%	8.43%	5.63%
Public Joint Stock Company Severstal	N/A	N/A	N/A

Dividends

Gerdau pays an annual dividend of $0.08 per share and has a dividend yield of 2.5%. Public Joint Stock Company Severstal pays an annual dividend of $0.26 per share and has a dividend yield of 1.2%. Gerdau pays out 13.1% of its earnings in the form of a dividend. Public Joint Stock Company Severstal pays out -23.9% 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.

Summary

Gerdau beats Public Joint Stock Company Severstal on 10 of the 12 factors compared between the two stocks.

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.

About Public Joint Stock Company Severstal

Public Joint Stock Company Severstal, together with its subsidiaries, manufactures and sells steel products. The company offers hot rolled steel, hot rolled products with a diamond-shaped and lentil-shaped corrugation, heavy plates, plates and tubes, hot rolled pickled steel, cold rolled steel, galvanized steel, galvanized steel with colored anti-corrosion coating, electric welded round steel tubes, shaped tubes, special tubes, large diameter pipes, steel plate for pipes, pies for oil platforms, steel plate for piles, and wind turbine towers. It also provides steel plate for wind turbine towers, wire rods, round bars, grinding balls, reinforcing bars, shaped rolled products, ropes, cold drawn steel and steel shaped profiles, steel fibre, cut wire shot, fasteners, meshes, nails, and wire, as well as pre-painted galvanized steel for roofing systems, sandwich panels, and facade solutions. Its products are used in construction, automotive, equipment for mining and transportation of bulk cargoes, lifting and rigging equipment, agricultural machinery, consumer good, and energy sectors. The company was formerly known as Open Joint-Stock Company Severstal and changed its name to Public Joint Stock Company Severstal in December 2014. Public Joint Stock Company Severstal was founded in 1955 and is headquartered in Moscow, Russia.