Gerdau Ameristeel Corp (USA) (GNA)

Major supplier of steel. Benefit from stimulus package

Construction seems to be ramping up.

Brazil economy is doing well and this steel company is expanding, sending material to the USA and China. As demand for steel picks up they will be in a good position to capture market share. Besides, I don't have any holdings in South America and this looked good.

Good growth and earnings.

Will fill gaps in distribution

infrastructure spending, Goldmans recommendation.

Market Cap (intraday)5: 2.10B
Enterprise Value (17-Apr-09)3: 4.38B
Trailing P/E (ttm, intraday): N/A
Forward P/E (fye 31-Dec-10) 1: 6.23
PEG Ratio (5 yr expected): 1.87
Price/Sales (ttm): 0.23
Price/Book (mrq): 0.69
Enterprise Value/Revenue (ttm)3: 0.51
Enterprise Value/EBITDA (ttm)3: 2.983
FINANCIAL HIGHLIGHTS
Fiscal Year
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 31-Dec-08
Profitability
Profit Margin (ttm): -6.89%
Operating Margin (ttm): 13.43%
Management Effectiveness
Return on Assets (ttm): 9.12%
Return on Equity (ttm): -17.38%
Income Statement
Revenue (ttm): 8.53B
Revenue Per Share (ttm): 19.738
Qtrly Revenue Growth (yoy): -17.20%
Gross Profit (ttm): 1.73B
EBITDA (ttm): 1.47B
Net Income Avl to Common (ttm): -587.41M
Diluted EPS (ttm): -1.36
Qtrly Earnings Growth (yoy): N/A
Balance Sheet
Total Cash (mrq): 688.35M
Total Cash Per Share (mrq): 1.59
Total Debt (mrq): 3.07B
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 5.709
Book Value Per Share (mrq): 6.69
Cash Flow Statement
Operating Cash Flow (ttm): 767.99M
Levered Free Cash Flow (ttm): 514.73M

This company is taking it hard on the chin and still hanging in there. A definite long play as steel will begin to make a comeback before the year is out. Have been and will continue to buy into this company for long term growth.

but low sell high!

The international diversity of the company will help to keep it stable. As the economy improves overtime building will have an upsurge therefore more demand for product.

Just look at what others in the CAPS community are saying about this stock. Steel has taken a beating of late and this company is ready to rebound!

Steel will rebound within a year.

you know steel is going back up...and this is one of the biggest steel stocks in US. so get it while the gettins good.

This is a strong company. They were honest about inventory value and took a big hit in the 4th qtr 08. Thay are getting beat up for it, but the other guys like CMC, NUE & X will have to fess up soon!! Buy at at these lower numbers and I think you'll see a good return in a year or two. You might see some prices in the upper $3 range before you see the $7 mark. Things will get worse before they get better.

Gerdau uses minimills and recycles scrap steel, much like one of my all-time favorite companies, Nucor. This makes them less sensitive to the price of steel, as lower steel prices mean lower input prices for them. Also, they seem to specialize in rebar, which should be a great play on infrastructure spending as well as a (hopeful) rebound in commercial building down the line.

A solid balance sheet and excellent growth make it a mystery why they're trading below book value and below a P/E of 3.

CompareValuation P/E (GAAP, TTM as of 6/30/2008) 2.35

P/E (Pro Forma, TTM as of 6/30/2008) 2.20

Forward P/E (as of 11/17/2008) 2.01

PEG 0.32

Price-to-Book 0.42

Price-to-Sales 0.23

Low High Average

5-Year P/E 3.00 11.10 NA

Gerdau Ameristeel is the second largest mini-mill steel producer in North America. The company has the capacity to manufacture approximately 12 million tons of mill finished steel product annually. Through its vertically integrated network of 19 mini-mills (including one 50%-owned joint venture mini-mill), 19 scrap recycling facilities and 65 downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada.

I like the valuation on this stock. I also like their corporate culture. They recently implemented an employee driven efficiency program with positive results. Not only has it helped stream line processes, it has saved millions in expenses. That is the kind of attitude that gets companies through turbulence.

I also like their strategic locations across the country, resulting in faster delivery and lower transportation costs. While basic materials are under pressure, this kind of a company will be well positioned when the economy recovers.

At current prices, this company looks like a small cap bargain.

This stock has a low 1 year forward P/E ratio.

I'm men made of steel

Cheap at 4-5x (peak) EBITDA ... the commodities cycle has turned, and demand will fall with a global slowdown
but the structural changes in the industry in North America (consolidation) will prevent the bloodbath of earlier downturns. The emerging market buildout (BRIC, ME) is not close to being done so long term, there will be plenty of demand and profit opportunity in the steel sector. Buy the stongest names in the industry (MT, NUE, GGB, GNA) while sentiment is weakest (now) if you are a long term (through the cycle) player.