Critical Survey: Dmc Global (BOOM) & Gerdau (GGB)

Gerdau (NYSE: GGB) and Dmc Global (NASDAQ:BOOM) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Dividends

Gerdau pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. Dmc Global pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. Gerdau pays out -3.3% of its earnings in the form of a dividend. Dmc Global pays out -6.0% 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. Dmc Global is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Gerdau and Dmc Global’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gerdau $10.85 billion 0.74 -$828.79 million ($0.30) -15.53
Dmc Global $158.57 million 2.32 -$6.50 million ($1.33) -18.76

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

Analyst Ratings

This is a summary of current ratings and target prices for Gerdau and Dmc Global, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gerdau 0 2 5 0 2.71
Dmc Global 0 0 1 0 3.00

Gerdau currently has a consensus price target of $4.00, suggesting a potential downside of 14.16%. Dmc Global has a consensus price target of $22.00, suggesting a potential downside of 11.82%. Given Dmc Global’s stronger consensus rating and higher probable upside, analysts plainly believe Dmc Global is more favorable than Gerdau.

Insider and Institutional Ownership

4.9% of Gerdau shares are held by institutional investors. Comparatively, 86.4% of Dmc Global shares are held by institutional investors. 0.0% of Gerdau shares are held by insiders. Comparatively, 5.1% of Dmc Global shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Gerdau and Dmc Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gerdau -5.44% 3.74% 1.73%
Dmc Global -10.69% -1.20% -0.81%

Volatility and Risk

Gerdau has a beta of 2.27, meaning that its stock price is 127% more volatile than the S&P 500. Comparatively, Dmc Global has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Gerdau Company Profile

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.

Dmc Global Company Profile

DMC Global Inc., formerly Dynamic Materials Corporation, is a diversified technology company. The Company operates a family of technical product and process businesses serving the energy, industrial and infrastructure markets. The Company’s businesses operate through an international network of manufacturing, distribution and sales facilities. The Company’s segments are NobelClad and DynaEnergetics. The NobelClad segment is engaged in the production of explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints. The DynaEnergetics segment manufactures, markets and sells oilfield perforating equipment and explosives, including detonating cords, detonators, bi-directional boosters and shaped charges, and seismic related explosives and accessories. It owns explosive metalworking and metallic processes, and registered trademarks, including Detaclad, Detacouple, EFTEK, ETJ 2000 and NOBELCLAD.

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