A Tale of Two Markets: Gerdau’s Diverging Fortunes in North and South America

Gerdau's latest financial performance paints a picture of a company operating in two distinct realities. While its North American steel operations provide a powerful engine for growth, persistent challenges in its home Brazilian market are weighing on investor sentiment and prompting increased caution from analysts.

Market observers are adopting a more guarded view of the steelmaker's prospects. On December 7, 2025, a notable downgrade to a "Hold" rating highlighted concerns over elevated valuations, macroeconomic volatility, and trade policy risks. Analysts now foresee a potential decline in margins and earnings in upcoming quarters, attributing this outlook primarily to a softening domestic market in Brazil. The current consensus price target sits at $4.00 per share.

Concurrently, Gerdau remains active in managing its capital structure. The company has executed the early repayment of a $500 million bond carrying a 4.25% coupon. Its share repurchase initiative is also progressing swiftly, with approximately 88% of the volume planned for 2025 already completed.

North American Strength Drives Quarterly Results

The firm's third-quarter 2025 financials were substantially bolstered by its activities in the United States and Canada. Adjusted EBITDA climbed 7% from the previous quarter to reach 2.7 billion Brazilian Real. Notably, the North American segment contributed a dominant 65% of the consolidated EBITDA, underscoring the region's stable demand environment and its role as the current profit pillar.

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Strategic Investment Amid Brazilian Headwinds

Gerdau is adjusting its investment strategy in response to market conditions. Capital expenditure (CAPEX) for Q3 totaled 1.7 billion Real, with 60% directed toward enhancing plant competitiveness. Looking ahead, the company has set its investment budget for the coming year at 4.7 billion Real, representing a 22% reduction compared to the forecast for 2025.

This strategic allocation persists despite significant pressure in Brazil. The local steel market continues to grapple with high import volumes, which suppress margins and undermine efforts to improve operational efficiency. It is a telling detail that over 75% of the company's investment spending is still allocated to Brazil, even as this segment contends with these pronounced difficulties.

Gerdau shares last traded at $3.65. The next key date for shareholders is December 18, 2025, when the scheduled dividend payment is due.