Is Gerdau (GGB) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Gerdau (GGB) is a stock many investors are watching right now. GGB is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We also note that GGB holds a PEG ratio of 0.32. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GGB's industry currently sports an average PEG of 0.34. Within the past year, GGB's PEG has been as high as 1.54 and as low as 0.28, with a median of 0.44.
We should also highlight that GGB has a P/B ratio of 1.40. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. GGB's current P/B looks attractive when compared to its industry's average P/B of 2.02. GGB's P/B has been as high as 1.97 and as low as 1.06, with a median of 1.38, over the past year.
Finally, investors will want to recognize that GGB has a P/CF ratio of 4.64. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. GGB's current P/CF looks attractive when compared to its industry's average P/CF of 11.92. Within the past 12 months, GGB's P/CF has been as high as 11.14 and as low as 4.25, with a median of 8.54.
These are just a handful of the figures considered in Gerdau's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GGB is an impressive value stock right now.
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