NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally weak debt management, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, AKS has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, AK STEEL HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 9.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.80% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$163.00 million or 246.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- AKS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.27%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 Corporation, through its subsidiaries, produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. AK Steel Holding has a market cap of $863.4 million and is part of the
industry. Shares are down 52.4% year to date as of the close of trading on Monday.
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