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AK Steel (AKS) Misses Earnings and Sales Estimates in Q4

Zacks Equity Research
·3 mins read

AK Steel Holding Corporation AKS reported net loss of $53.9 million or 17 cents per share in the fourth quarter of 2019 against net income of $33.5 million or 11 cents per share in the prior-year quarter.

Adjusted loss was 11 cents per share for the quarter, which was wider than the Zacks Consensus Estimate of a loss of 9 cents.

Net sales of $1,445.7 million in the quarter fell 13.8% year over year and missed the Zacks Consensus Estimate of $1,479.7 million.

Per the company, the results were impacted by lower shipments to the automotive market, a sharp decline in steel spot market selling prices, and higher costs for iron ore, coal and coke during the reported quarter. These were partly offset by reduced costs for scrap and energy.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

 

AK Steel Holding Corporation Price, Consensus and EPS Surprise
AK Steel Holding Corporation Price, Consensus and EPS Surprise

AK Steel Holding Corporation price-consensus-eps-surprise-chart | AK Steel Holding Corporation Quote

Pricing and Shipments

Flat-rolled steel shipments in the quarter were down 9.3% year over year to 1,259,500 tons. Average selling price per ton for flat-rolled steel was $1,027 compared with $1,106 in the year-ago quarter.

2019 Highlights

For 2019, the company recorded net income of $11.2 million or 4 cents per share, down from $186 million or 59 cents per share logged in 2018. Adjusted earnings declined 46.4% year over year to $107.4 million or 34 cents per share.

Net sales declined 6.7% year over year to $6,359.4 million.

Financials

AK Steel exited 2019 with cash and cash equivalents of $31 million, down 36.2% year over year. The company’s long-term debt declined 1.2% year over year to $1,968.8 million.

Cash flow from operating activities was $265.9 million for 2019 compared with $364.7 million a year ago.

Guidance

Moving ahead, AK Steel expects that major maintenance outage at its Dearborn Works, and substantial investments made in the blast furnace and steelmaking operations will generate significant recurring cost savings.

Price Performance

Shares of the company have dipped 8.9% in the past year compared with the industry’s 23.7% decline.

 

 

Zacks Rank & Stocks to Consider

AK Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Commercial Metals Company CMC and NovaGold Resources Inc. NG.

Daqo New Energy has a projected earnings growth rate of 353.7% for 2020. The company’s shares have rallied 114.8% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals currently has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.7% for 2020. The company’s shares have rallied 22.1% in a year.

NovaGold has a projected earnings growth rate of 11.1% for 2020 and carries a Zacks Rank #2. The company’s shares have surged around 142% year over year.

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