AK Steel (AKS) Stock Slumping on Second Quarter Earnings Guidance

NEW YORK (TheStreet) -- AK Steel Holding Corp. (AKS) stock is declining by 2.87% to $4.57 in late morning trading on Monday, after the steel and aluminum producing company issued guidance for the 2015 second quarter and is expecting an earnings loss wider than analysts had forecast.

For the second quarter AK Steel said it will report a net loss of 37 cents per diluted share to a loss of 42 cents per diluted share.

Analysts polled by Thomson Reuters are expecting a loss of 27 cents per share for the second quarter.

"The company's expected second quarter results continued to be negatively impacted by lower carbon steel prices due to the continued high level of what the company believes are unfairly traded imports," AK Steel said in a statement.

AK Steel is a West Chester, OH.-based integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products.

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 several 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 173.01% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 (-$0.64 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 11.81%.
  • You can view the full analysis from the report here: AKS Ratings Report

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