InvestorsObserver gives Gerdau SA ADR (GGB) a strong valuation score of 81 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. GGB currently holds a better value than 81% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
GGB has a trailing twelve month Price to Earnings (PE) ratio of 31.1 which places it above the histroical average of roughly 15. GGB is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. GGB's trailing-12-month earnings per share (EPS) of 0.35 does not justify its share price in the market. Trailing PE ratios don't factor in the company's projected growth rate, resulting in select firms having high PE ratios due to high growth potential enticing investors even when the underlying company has produced low earnings to date.
GGB currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 1.51. The market is currently overvaluing GGB in relation to its projected growth due to the PEG ratio being above the fair market value of 1. GGB's PEG comes from its forward price to earnings ratio being divided by its growth rate. Due to the inclusion of more fundamentals of a company's overall health and a focus on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
Summary
GGB' has a weak valuation at its current share price on account of a overvalued PEG ratio despite strong growth. GGB's PE and PEG are worse than the market average leading to a below average valuation score.
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