Here Is Why Gerdau S.A. (GGB) Earnings Are So Important

After opening Thursday at around $3.98, Gerdau S.A. (NYSE:GGB) stock surged to as high as $4.08. It then made a downturn, dipping as low as $3.92. Although the stock bounced a bit into the close, it finished the day at $4.06, down 0 points or 0 percent on the day. The final volume for the day was 11.307 million, which was less than its average volume. The firm is left with a market cap of $6.36 billion and now has 1.57 billion shares outstanding. Gerdau S.A. (GGB) stock has lost -9.78 percent of market value in 21 trading days.

GGB stock has a trailing 3-year beta of 2.23, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.08 a share in the trailing twelve months. The stock’s value has surged 10.71 percent year to date (YTD) against a rise of 22.21 percent in 12 month’s time. The company’s shares still trade -22.59 percent away from its 1-year high of $5.24 and 27.5 percent up from 52-week low of $3.18. The average consensus rating on the company is 1.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Gerdau S.A. (GGB) will probably climb 42.36 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $6.56-month high price target. This represents a whopping 61.58 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $5.32, which represents a return potential of 31.03 percent when compared to the closing price of the stock of $4.06 on Thursday, December 06. The lowest price target for the stock is $2.72 — slightly more than -33 percent from GGB’s current share price.

History has shown that shares in Gerdau S.A. have gone down on 10 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings.

The stock is currently hovering around the first support level of $3.96. Below this, the next support is placed in the zone of $3.86. Till the time, the GGB stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 48.44 on daily chart, which may remain a cause for concern. If the price breaks below $3.86 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $4.12 mark may result into a pull-back move towards $4.18 level.

Shares of Gerdau S.A. (GGB) are trading at a P/E ratio of 46.38 times earnings reported for the past 12 months. The industry GGB operates in has an average P/E of 10.53. Its P/E ratio went as low as 11.48X and as high as 19.96 over the 5-year span.Further, it is sporting a 0.54 on the Price-to-Sales ratio. Compare this with the industry average P/S of 0.55. 13.1 percent is the gross profit margin for Gerdau S.A. and operating margin sits at 5 percent. Along with this, the net profit margin is 1.2 percent.