AK Steel (AKS) Strong On High Relative Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified AK Steel ( AKS) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified AK Steel as such a stock due to the following factors:

  • AKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.5 million.
  • AKS has traded 1.5 million shares today.
  • AKS is trading at 2.02 times the normal volume for the stock at this time of day.
  • AKS is trading at a new high 3.13% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on AKS:

AK Steel Holding Corporation, through its subsidiary, AK Steel Corporation, produces flat-rolled carbon, stainless and electrical steel, and tubular products in the United States and internationally. Currently there are 3 analysts that rate AK Steel a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for AK Steel has been 9.2 million shares per day over the past 30 days. AK has a market cap of $922.8 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.21 and a short float of 26.8% with 5.55 days to cover. Shares are down 8.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AK Steel as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 255.7% when compared to the same quarter one year ago, falling from -$86.10 million to -$306.30 million.
  • The gross profit margin for AK STEEL HOLDING CORP is currently extremely low, coming in at 9.05%. 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 -17.49% significantly underperformed when compared to the industry average.
  • The share price of AK STEEL HOLDING CORP has not done very well: it is down 16.21% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 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 (-$0.55 versus -$0.74).
  • Net operating cash flow has significantly increased by 97.84% to -$2.70 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 -35.64%.

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