NEW YORK (TheStreet) -- AK Steel (AKS - Get Report) stock is trading lower on Friday after issuing second-quarter guidance below analysts' estimates. The company anticipates an adjusted net loss between 2 cents and 6 cents a share.
"Second quarter results will be negatively impacted by the lingering effects of the extreme winter weather conditions and by the adverse impact of mark-to-market hedging losses, which the company expects will be substantially offset in the second half of 2014 by lower costs for commodities or by gains in its hedging positions," the company said in a statement.
By midmorning, shares had dropped 1.1% to $7.36. Trading volume of 2.9 million shares was just under half its three-month daily average.
Separately, TheStreet Ratings team rates AK STEEL HOLDING CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AK STEEL HOLDING CORP (AKS) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 769.7% when compared to the same quarter one year ago, falling from -$9.90 million to -$86.10 million.
- The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 5.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.22% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$125.00 million or 1685.71% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- AK STEEL HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AK STEEL HOLDING CORP continued to lose money by earning -$0.34 versus -$9.10 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.34).
- Compared to its closing price of one year ago, AKS's share price has jumped by 87.09%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in AKS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: AKS Ratings Report