Gerdau SA ADR Dossier - Source-backed chat

Gerdau SA ADR

GGBR4B3 S.A. - Brasil, Bolsa, Balcão

SectorMaterials

IndustrySteel

Beta (adjusted)0.93

Intrinsic Value $11.62median of 5 methods · middle span $1-$124based on filings through 31 Dec 2025

Market Price $4.81Price as of 1 Oct 2026

Significantly undervaluedIntrinsic value is 142% above the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

marker beyond scale (+142%)

Data confidence Sign in to view data confidence

Market Cap $9.4B

Enterprise Value $17.7B

Shares Outstanding 2B diluted

Moat Rating None

Next Earnings Date26 Oct 2026

Last ex-dividend21 Aug 2026

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

Gerdau S.A. presents a compelling value opportunity in 2026, driven by its highly profitable North American operations, which contribute over 50% of consolidated EBITDA, and a cyclical recovery in its Brazilian domestic market. The company's valuation remains highly attractive, trading at a discount to its tangible book value (P/B of ~0.88x) and historical multiples, despite maintaining a robust balance sheet with leverage well below 1.0x Net Debt/EBITDA. External headwinds, such as Chinese steel dumping in Brazil, are beginning to ease due to newly implemented anti-dumping duties and import quotas. Furthermore, strategic capital expenditures, including the Midlothian expansion in Texas and renewable energy integrations like the Barro Alto Solar Complex, position Gerdau for sustainable long-term growth and margin expansion.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Street view · analyst 12-month targets5 analysts · as of 18 Aug 2026

Low · most bearish analyst$4.96

Mean target$5.58

High · most bullish analyst$5.95

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Bear CaseDownside scenario

$4.96

The bear case is triggered by a premature normalization of US steel margins due to weakening demand in non-residential construction or a renegotiation of the USMCA that pressures North American margins from 24% down to 19%. Domestically, persistent high interest rates in Brazil continue to squeeze real estate and civil construction demand, while Chinese steel dumping bypasses tariff barriers. Furthermore, potential tax liabilities under discussion in Brazil (up to BRL 6 billion) could materialize, severely impacting cash reserves and restricting capital allocation.

Base CaseCentral scenario

$5.58

Matches the consensus mean

The base case reflects steady performance in North America with resilient demand in key end-use markets, offset by normal seasonal fluctuations. Brazilian operations show gradual margin recovery as anti-dumping measures stabilize domestic pricing. Capital expenditures remain aligned with the BRL 4.7 billion guidance for 2026, and leverage is maintained below 1.0x Net Debt/EBITDA. Free cash flow remains positive, supported by disciplined working capital management, allowing the company to sustain its dividend distributions and share buybacks.

Bull CaseUpside scenario

$5.95

The bull case assumes rapid execution and startup of the Midlothian, Texas expansion in H2 2026, adding 150,000 mt of annual crude steel capacity and contributing BRL 275 million in incremental EBITDA. Additionally, the newly implemented Brazilian import quotas and anti-dumping duties successfully curb Chinese steel imports, allowing domestic steel prices and margins to rebound faster than expected. Strong demand from US infrastructure spending and Brazilian housing initiatives drives shipments, while the Barro Alto Solar Complex lowers energy costs, pushing consolidated EBITDA margins toward historical highs.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits

Strong geographic diversification with highly profitable North American operations offsetting Brazilian macro volatility.
Robust balance sheet with conservative leverage (Net Debt/EBITDA below 0.8x) and positive free cash flow generation.
Low-carbon steelmaking leadership, utilizing a scrap-based Electric Arc Furnace (EAF) model that minimizes carbon intensity and future environmental liabilities.
Strategic growth projects, such as the Midlothian expansion and Barro Alto Solar Complex, enhancing long-term cost competitiveness.

Key Investment Risks

Systemic exposure to global steel cycles and raw material (scrap and iron ore) price volatility.
Persistent import penetration from low-cost Chinese steel dumping in Latin American markets.
Regulatory and trade policy risks, including potential renegotiations of the USMCA or changes to Section 232 tariffs.
High interest rates in Brazil dampening domestic civil construction and infrastructure demand.

Thesis Invalidation Triggers

A sharp decline in North American steel margins below 15% due to a severe US economic slowdown.
Failure of Brazilian anti-dumping duties to curb import volumes, leading to further domestic market share erosion.
Materialization of the BRL 6 billion tax liability in Brazil, significantly weakening the balance sheet.
Delays or significant cost overruns in major capital projects like the Midlothian expansion.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.