Olympic Steel (NASDAQ: ZEUS) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their profitabiliy, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Analyst Recommendations

This is a summary of current ratings and target prices for Olympic Steel and Gerdau, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Olympic Steel 0 1 2 0 2.67
Gerdau 0 2 2 0 2.50

Olympic Steel presently has a consensus target price of $22.33, suggesting a potential upside of 28.06%. Given Olympic Steel’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Olympic Steel is more favorable than Gerdau.

Earnings & Valuation

This table compares Olympic Steel and Gerdau’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Olympic Steel $1.13 billion 0.17 $35.05 million $0.65 26.83
Gerdau $10.85 billion 0.42 $1.10 billion N/A N/A

Gerdau has higher revenue and earnings than Olympic Steel.

Institutional and Insider Ownership

73.7% of Olympic Steel shares are owned by institutional investors. Comparatively, 5.0% of Gerdau shares are owned by institutional investors. 18.3% of Olympic Steel shares are owned by insiders. Comparatively, 0.0% of Gerdau shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Olympic Steel has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500. Comparatively, Gerdau has a beta of 2.37, suggesting that its stock price is 137% more volatile than the S&P 500.

Dividends

Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. Gerdau pays an annual dividend of $0.01 per share and has a dividend yield of 0.4%. Olympic Steel pays out 12.3% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Olympic Steel 0.65% 2.41% 1.10%
Gerdau -5.25% -7.32% -3.41%

Summary

Olympic Steel beats Gerdau on 8 of the 14 factors compared between the two stocks.

About Olympic Steel

Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.

About Gerdau

Gerdau S.A. (Gerdau) is a manufacturer of long steel in the North and South America. The Company is engaged in the production and commercialization of steel products in general, through its mills located in Argentina, Brazil, Canada, Chile, Colombia, Spain, the United States, Guatemala, India, Mexico, Peru, the Dominican Republic, Uruguay and Venezuela. Its segments are Brazil Operations, which includes operations of steel and iron ore in Brazil, except Special Steels, and the operation of metallurgical coal and coke in Colombia; North America Operations, which includes all operations in North America, except those of Mexico and Special Steels; South America Operations, which includes operations in South America, except Brazil and the operation of metallurgical coal and coke in Colombia, and Special Steel Operations, including special steel operations in Brazil, Spain, the United States and India. It supplies its customers a range of products, including iron ore semi-finished products.

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