AK Steel shares dip despite 3Q results
Shares of AK Steel Holding Corp. dropped 14.7 percent after company officials announced third quarter earnings were better than expected.
AK Steel reported a loss of $7.2 million, or 5 cents per share, in the three months ended Sept. 30. That is a slimmer loss from a year ago when AK had a $31.7 million loss.
Adjusted for acquisition-related expenses, the West Chester-based company reported a profit of $16.4 million or 12 cents per share. The average estimate of analysts surveyed by Zacks Investment Research forecast earnings of 9 cents per share.
AK Steel completed a $707 million cash deal in September to acquire an integrated steelmaking operation in Michigan, a West Virginia cokemaking facility and interests in three joint ventures that process flat-rolled steel products. The company financed the purchase with debt and equity offerings.
Steel shipments rose nearly 18 percent in the quarter and the average selling price rose nearly 2 percent to $1,089 per ton. The company posted revenue of $1.59 billion in the period, which also topped Wall Street forecasts. Analysts expected $1.48 billion, according to Zacks.
Shares of AK Steel Holding Corp. were down more than 15 percent in Tuesday trading despite company officials announcing third quarter earnings were better than expected.
AK Steel reported a loss of $7.2 million, or 5 cents per share, in the three months ended Sept. 30. That is a slimmer loss from a year ago when the West Chester-based company had $31.7 million loss.
Adjusted for acquisition-related expenses, the West Chester-based company reported a profit of $16.4 million, or 12 cents per share in the three months ended Sept. 30. The average estimate of analysts surveyed by Zacks Investment Research forecast earnings of 9 cents per share.
AK Steel completed a $707 million cash deal in September to acquire an integrated steelmaking operation in Michigan, a West Virginia coke making facility and interests in three joint ventures that process flat-rolled steel products. The company financed the purchase with debt and equity offerings.
Steel shipments rose nearly 18 percent in the quarter and the average selling price rose nearly 2 percent to $1,089 per ton. The company posted revenue of $1.59 billion in the period, which also topped Wall Street forecasts. Analysts expected $1.48 billion, according to Zacks.
"AK Steel's third quarter financial performance exceeded our expectations," said James Wainscott, AK Steel chairman, president and chief executive. "Our continuing trend of posting adjusted net income provides us with a solid foundation for future growth in earnings and cash flow."
However, the company warned its fourth quarter results would be hurt by planned maintenance at its Ashland, Kentucky mill. AK Steel said it could incur $30 million of costs as a result of maintenance spending and reduced production levels prior to the shutdown.
Shares in AK closed at $6.34, down $1.09. Volume was high at 28.9 million shares, 77 percent above the 90-day average.
In a Nov. 1 report, Christopher Muir, equity analyst at S&P Capital IQ, rated AK Steel stock as a "strong sell" despite expectations of a long-term rise in earnings. Muir set the company's 12-month share price target at $8.
Muir said the company's exposure to the auto industry and other cyclical markets and its high debt load will cause AK Steel shares to rise slower than its peers. He said the company has taken steps to reduce its cost disadvantages by lowering health care and retiree costs and benefiting from greater internal sourcing of raw materials.