Will AK Steel (AKS) Continue to Move Higher After Providing First Quarter Guidance?

NEW YORK (TheStreet) -- Shares of AK Steel  (AKS) stock are higher today by 33 cents, or 4.93%, to $7.03. The company today provided guidance for its first quarter 2014 financial results, and said it expects to report a net loss of $0.44 to $0.49 per diluted share of common stock. The expected net loss was driven principally by several significant factors during the first quarter that the company does not expect to continue during the rest of the year, including higher energy costs related to the extreme cold weather, an unplanned blast furnace outage, the acceleration of a planned blast furnace outage, and a charge for a tentative legal settlement.

AK Steel expects shipments of approximately 1,250,000 to 1,275,000 tons in the first quarter of 2014, an approximate 10% to 12% decrease from 1,420,000 tons in the fourth quarter of 2013. The reduction in shipments for the first quarter is attributable principally to the effects of the unplanned outage at the company's Ashland Works blast furnace resulting in a decline in shipments of carbon steel to the spot market and a decline in shipments of electrical steel, partially offset by higher automotive shipments.

The company expects its average selling price for the first quarter of 2014 to increase by approximately 6% to approximately $1,095 from its average selling price of $1,031 per ton in the fourth quarter of 2013. The increase in average selling price is primarily due to a richer shipment mix of value-added products.

AK Steel has said that it plans to release its first quarter 2014 financial results before the opening of trading on the New York Stock Exchange on Tuesday, April 22, 2014.

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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 poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 11.23%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, AKS's net profit margin of 2.40% is significantly lower than the industry average.
  • Net operating cash flow has declined marginally to $113.50 million or 3.07% when compared to the same quarter last year. Despite a decrease in cash flow AK STEEL HOLDING CORP is still fairing well by exceeding its industry average cash flow growth rate of -51.14%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 115.3% when compared to the same quarter one year prior, rising from -$230.40 million to $35.20 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • This stock has increased by 72.03% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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

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