Contrasting Haynes International (HAYN) & Gerdau (GGB)

Haynes International (NASDAQ: HAYN) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Valuation & Earnings

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This table compares Haynes International and Gerdau’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Haynes International $395.21 million 1.35 -$10.19 million ($0.78) -54.68
Gerdau $11.57 billion 0.71 -$112.55 million $0.09 53.00

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

Volatility & Risk

Haynes International has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Gerdau has a beta of 2.3, meaning that its share price is 130% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Haynes International -8.18% -3.76% -1.88%
Gerdau -0.88% 5.50% 2.59%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Haynes International and Gerdau, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Haynes International 0 1 2 0 2.67
Gerdau 0 2 6 0 2.75

Haynes International currently has a consensus price target of $36.50, indicating a potential downside of 14.42%. Gerdau has a consensus price target of $4.00, indicating a potential downside of 16.14%. Given Haynes International’s higher probable upside, analysts clearly believe Haynes International is more favorable than Gerdau.

Dividends

Haynes International pays an annual dividend of $0.88 per share and has a dividend yield of 2.1%. Gerdau pays an annual dividend of $0.03 per share and has a dividend yield of 0.6%. Haynes International pays out -112.8% of its earnings in the form of a dividend. Gerdau pays out 33.3% 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. Haynes International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

4.2% of Gerdau shares are owned by institutional investors. 4.4% of Haynes International shares are owned by company insiders. Comparatively, 0.0% of Gerdau shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Gerdau beats Haynes International on 9 of the 15 factors compared between the two stocks.

Haynes International Company Profile

Haynes International, Inc. develops, manufactures, markets, and distributes nickel and cobalt-based alloys in sheet, coil, and plate forms in the United States, Europe, Asia, and internationally. The company offers high-temperature resistant alloys (HTA) and corrosion-resistant alloys (CRA). Its HTA products are used by manufacturers of equipment, including jet engines for the aerospace market; gas turbine engines for power generation and waste incineration; and industrial heating equipment. The company's CRA products are used in various applications, such as chemical processing, power plant emissions control, and hazardous waste treatment. Its products also have applications in flue-gas desulfurization, oil and gas, waste incineration, industrial heat treating, automotive, instrumentation, biopharmaceuticals, and solar and nuclear fuel industries. In addition, the company produces products as seamless and welded tubulars, as well as in slab, bar, billet, and wire forms. It sells its products primarily through direct sales organizations, and network of independent distributors and sales agents. Haynes International, Inc. was founded in 1912 and is headquartered in Kokomo, Indiana.

Gerdau Company Profile

Gerdau S.A. provides steel-related products and services worldwide. It operates through four segments: Brazil Operations, North America Operations, South America Operations, and Special Steel Operations. The company offers semi-finished products, including billets, blooms, and slabs; common long rolled products, such as rebars, wire rods, merchant bars, light shapes, and profiles, which are used primarily in the construction and manufacturing industries; and drawn products comprising barbed and barbless fence wires, galvanized wires, fences, concrete reinforcing wire meshes, nails, and clamps, as well as mines and produces iron ore. It also produces special steel products for use in auto parts, light and heavy vehicles, and agricultural machinery, as well as the oil and gas, wind energy, machinery and equipment, mining and rail, and others markets. In addition, the company offers flat products comprising hot rolled coils and heavy plates; and resells flat steel products. It sells its products through independent distributors, direct sales from the mills, and its retail network. The company was founded in 1901 and is based in Sao Paulo, Brazil. Gerdau S.A. is a subsidiary of Metalurgica Gerdau S.A.

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