NEW YORK (TheStreet) -- AK Steel (AKS) was dropping on Monday in an industry-wide sell-off and a day before releasing full-year earnings. By mid-afternoon, shares had taken off 5.3% to $5.92, while competitors Steel Dynamics (STLD) and United States Steel (X) plunged 2.4% and 0.91%, respectively.
West Chester, Ohio-based AK Steel is due to report fourth-quarter and full-year earnings before the bell on Tuesday. Analysts surveyed by Thomson Reuters expect the steelmaker to report fourth-quarter net income of 2 cents a share on $1.44 billion in revenue. Consensus is for a full-year net loss of 60 cents a share on $5.55 billion in revenue.
TheStreet Ratings team rates AK STEEL HOLDING CORP as a Sell with a ratings score of D. The team has this to say about their recommendation:
"We rate AK STEEL HOLDING CORP (AKS) a SELL. This is driven by a number of negative factors, 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 weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$119.20 million or 53.21% 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.
- The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 10.34%. Regardless of AKS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AKS's net profit margin of -2.38% significantly underperformed when compared to the industry average.
- AKS, with its decline in revenue, underperformed when compared the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- AK STEEL HOLDING CORP reported significant earnings per share improvement in the most recent quarter compared to 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 reported poor results of -$9.10 versus -$1.41 in the prior year. This year, the market expects an improvement in earnings (-$0.57 versus -$9.10).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 47.9% when compared to the same quarter one year prior, rising from -$60.90 million to -$31.70 million.
- You can view the full analysis from the report here: AKS Ratings Report