Gerdau (NYSE: GGB) and SunCoke Energy Partners (NYSE:SXCP) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.
This table compares Gerdau and SunCoke Energy Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|SunCoke Energy Partners||-9.04%||15.35%||5.55%|
This table compares Gerdau and SunCoke Energy Partners’ 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||0.59||-$828.79 million||($0.30)||-12.40|
|SunCoke Energy Partners||$779.70 million||1.03||$119.10 million||($1.84)||-9.48|
SunCoke Energy Partners has lower revenue, but higher earnings than Gerdau. Gerdau is trading at a lower price-to-earnings ratio than SunCoke Energy Partners, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
4.9% of Gerdau shares are held by institutional investors. Comparatively, 13.3% of SunCoke Energy Partners shares are held by institutional investors. 0.0% of Gerdau shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
This is a breakdown of current ratings and target prices for Gerdau and SunCoke Energy Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|SunCoke Energy Partners||0||0||1||0||3.00|
Gerdau presently has a consensus target price of $4.00, indicating a potential upside of 7.53%. Given Gerdau’s higher possible upside, research analysts clearly believe Gerdau is more favorable than SunCoke Energy Partners.
Volatility & Risk
Gerdau has a beta of 2.27, indicating that its share price is 127% more volatile than the S&P 500. Comparatively, SunCoke Energy Partners has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.
Gerdau pays an annual dividend of $0.01 per share and has a dividend yield of 0.3%. SunCoke Energy Partners pays an annual dividend of $2.38 per share and has a dividend yield of 13.6%. Gerdau pays out -3.3% of its earnings in the form of a dividend. SunCoke Energy Partners pays out -129.3% 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. SunCoke Energy Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
SunCoke Energy Partners beats Gerdau on 9 of the 16 factors compared between the two stocks.
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.
SunCoke Energy Partners Company Profile
SunCoke Energy Partners, L.P. is engaged in the production of coke used in the blast furnace production of steel. As of December 31, 2016, the Company owned a 98% interest in Haverhill Coke Company LLC (Haverhill), Middletown Coke Company, LLC (Middletown), and Gateway Energy and Coke Company, LLC (Granite City). The Company’s segments include Domestic Coke, which consists of the Haverhill, Middletown and Granite City cokemaking and heat recovery operations located in Franklin Furnace, Ohio; Middletown, Ohio, and Granite City, Illinois, respectively, and Coal Logistics, which consists of the Company’s Convent Marine Terminal, Kanawha River Terminals, LLC and SunCoke Lake Terminal, LLC (Lake Terminal) coal handling and/or mixing service operations in Convent, Louisiana; Ceredo and Belle, West Virginia, and East Chicago, Indiana, respectively. It also provides coal handling and/or mixing services at its Coal Logistics terminals to steel, coke, electric utility and coal mining customers.
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