Prices of the steel making ingredient closed at $62.70 a ton on Wednesday, its lowest price in six years. A Reuters poll of analysts published Wednesday predicted a median iron ore price of $68 a ton in 2015. This would be far below the 2014 average of $97 a ton, and also lower than the previous record low year average of $86 in 2009.
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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 some concerns, 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 deteriorating net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 61.6% when compared to the same quarter one year ago, falling from $35.20 million to $13.50 million.
- The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 10.07%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.67% significantly trails the industry average.
- Net operating cash flow has decreased to $57.80 million or 49.07% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.05%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 73.07% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AK STEEL HOLDING CORP reported poor results of -$0.74 versus -$0.34 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus -$0.74).
- You can view the full analysis from the report here: AKS Ratings Report