One Factor Bringing AK Steel (AKS) Stock Up Today

NEW YORK (TheStreet) -- Shares of AK Steel (AKS) were gaining 2% to $5.55 Wednesday, continuing recent gains following the announcement that U.S. Steel (X) acquired the steel producer's remaining shares in Double Eagle Steel Coating.

AK Steel will receive $25.2 million for its half of the joint venture in DESCO and its 700,000-ton electrolytic-galvanizing line, according to Pittsburgh Business Times. Following the transaction U.S. Steel will fully own DESCO.

AK Steel acquired its shares of DESCO in July 2014 when it acquired Severstal's North American operations in Dearborn, MI.

About 8.5 million shares of AK Steel were traded by 1:35 p.m. Wednesday, compared to the company's average trading volume of 9.1 million shares a day.

AK Steel is a steel producer based in Middletown, Ohio.

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 multiple weaknesses, 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 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 analysis by TheStreet Ratings Team goes as follows:

  • 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%.
  • You can view the full analysis from the report here: AKS Ratings Report

More from Markets

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing