Reviewing Gerdau (NYSE:GGB) and Alamos Gold (NYSE:AGI)

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

Institutional and Insider Ownership

64.3% of Alamos Gold shares are held by institutional investors. Comparatively, 1.5% of Gerdau shares are held by institutional investors. 0.5% of Alamos Gold shares are held by insiders. Comparatively, 0.0% of Gerdau shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Alamos Gold pays an annual dividend of $0.16 per share and has a dividend yield of 0.4%. Gerdau pays an annual dividend of $0.15 per share and has a dividend yield of 3.0%. Alamos Gold pays out 5.8% of its earnings in the form of a dividend. Gerdau pays out 65.2% 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.

Volatility & Risk

Alamos Gold has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Gerdau has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500.

Profitability

This table compares Alamos Gold and Gerdau’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alamos Gold	52.64%	19.28%	13.47%
Gerdau	3.37%	7.97%	5.18%

Earnings & Valuation

This table compares Alamos Gold and Gerdau”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alamos Gold	$1.81 billion	8.55	$885.80 million	$2.77	13.34
Gerdau	$12.51 billion	0.78	$248.41 million	$0.23	21.65

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

Analyst Recommendations

This is a breakdown of current ratings for Alamos Gold and Gerdau, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alamos Gold	0	2	8	0	2.80
Gerdau	0	6	2	1	2.44

Alamos Gold currently has a consensus target price of $47.50, indicating a potential upside of 28.52%. Gerdau has a consensus target price of $5.57, indicating a potential upside of 11.95%. Given Alamos Gold’s stronger consensus rating and higher probable upside, analysts plainly believe Alamos Gold is more favorable than Gerdau.

Summary

Alamos Gold beats Gerdau on 12 of the 17 factors compared between the two stocks.

About Alamos Gold

Alamos Gold Inc. engages in the acquisition, exploration, development, and extraction of precious metals in Canada and Mexico. The company primarily explores for gold deposits. It holds 100% interest in the Young-Davidson mine and Island Gold mine located in the Ontario, Canada; Mulatos mine located in the Sonora, Mexico; and Lynn Lake project situated in the Manitoba, Canada. The company also holds interest in the Quartz Mountain project located in the Oregon United states. Alamos Gold Inc. was founded in 2003 and is based in Toronto, Canada.

About Gerdau

Gerdau S.A., together with its subsidiaries, operates as a steel producer company. The company operates through Brazil Business, North America Business, South America Business, and Special Steel Business segments. It also provides semi-finished products, including billets, blooms, and slabs; common long rolled products, such as rebars, wire rods, merchant bars, light shapes, and profiles to the construction and manufacturing industries; drawn products comprising barbed and barbless fence wires, galvanized wires, fences, concrete reinforcing wire mesh, nails, and clamps for manufacturing, construction, and agricultural industries; and special steel products used in auto parts, light and heavy vehicles, and agricultural machinery, as well as in the oil and gas, wind energy, machinery and equipment, mining and rail, and other markets. In addition, the company offers flat products, such as hot-rolled steel coils and heavy plates; and resells flat steel products. Further, it operates mines that produce iron ore located in the Brazilian state of Minas Gerais. The company sells its products through independent distributors, direct sales from the mills, and its retail network. Gerdau S.A. was founded in 1901 and is based in São Paulo, Brazil.