AK Steel (AKS) Dips on Analyst Downgrade After Earnings Release

Michael Teague |

Shares for AK Steel Holding Corporation (AKS) , one of the larger US producers of steel and iron, was trading lower throughout Tuesday’s session after the company’s early morning release of its balance sheet for the third quarter.

Tuesday’s earnings report showed the company at a loss of $31.7 million, or $0.23 per share on revenue of $1.33 billion, compared to the year earlier period when losses were much larger at $60.9 million, or $0.55 per share, on revenue of $1.46 billion. The average of analyst estimates had the company losing $0.24 per share.

During the recently ended period, the company was selling one ton of steel for an average price of $1,071, only a slight change on the prior year period, and up sequentially from Q2 2013 as a result of a more profitable mix of value-added products that cushioned sales from lower surcharges for raw materials, and delayed shipments.

The dip in shares had some help however from UBS, whose analyst Matt Murphy cut AK’s rating from Neutral to Sell, a decision he explained  by saying “The company has suffered from weak margins and high leverage, compounded by debt and high legacy liabilities. AKS is benefitting from an improving US auto sector; however, it will be some time before it can realize any benefit from its raw materials integration strategy, which is underway. The largest issue we see for AKS is the cash drag from required pension payments notwithstanding an improving economy and rising interest rates.”

Shares were down over two percent to just a hair underneath $4 in midday trading. AK has had a rough year overall, down some 12 percent, though things have picked up in the recent quarter, with shares adding nearly 20 percent.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AKS AK Steel Holding Corporation 9.65 0.32 3.43 9,215,651
CHLMF PUF Ventures Inc n/a n/a n/a n/a

Comments

Emerging Growth

Enertopia Corp

Enertopia Corp is engaged in the exploration of lithium in Nevada, USA. The Company's project includes Central Nevada Lithium Brine Projects.

Private Markets

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…

Lyft

Lyft matches drivers using their own personal vehicles with passengers who request rides through the smartphone app, and the passengers pay automatically through the app. When using Lyft, passengers have…