NEW YORK (TheStreet) -- Shares of AK Steel (AKS) continue to rise, up 5.48% to $6.35 in early afternoon trading Friday, after the steel manufacturer announced its fourth-quarter guidance on Thursday that beat analysts' expectations.
AK Steel said it anticipates earnings in the range of 5 cents to 10 cents a share for the fourth quarter even after factoring in $31 million in costs linked to a scheduled blast furnace outage at its Ashland Works plant. Analysts polled by Thomson Reuters expect earnings of 4 cents a share for the quarter.
The company also announced it expects steel shipments to surge 37% to approximately 2 million tons in the fourth quarter from approximately 1.46 million tons in the third quarter. AK Steel attributed the anticipated increase to acquisitions and high demand from the automobile industry.
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AK Steel also said it should benefit from lower iron ore, carbon scrap, and energy prices in the fourth quarter.
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 poor profit margins and generally disappointing historical performance in the stock itself."
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 12.65%. 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 -0.45% significantly underperformed when compared to the industry average.
- AKS has underperformed the S&P 500 Index, declining 7.47% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- AK STEEL HOLDING CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. 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 (-$0.19 versus -$0.34).
- 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 77.3% when compared to the same quarter one year prior, rising from -$31.70 million to -$7.20 million.
- Net operating cash flow has significantly increased by 58.47% to -$49.50 million when compared to the same quarter last year. In addition, AK STEEL HOLDING CORP has also vastly surpassed the industry average cash flow growth rate of -29.96%.
- You can view the full analysis from the report here: AKS Ratings Report