ArcelorMittal or AK Steel: Which Could Offer Valuation Upside?
AK Steel (AKS) is trading at an EV-to-EBITDA multiple of 6.6x based on its fiscal 2017 expected EBITDA. AK Steel reduced its spot exposure.
ArcelorMittal’s net debt rose in 1Q17 due to higher working capital investment. The company’s net debt-to-EBITDA is 1.8x as of March 31, 2017.
U.S. Steel Corporation (X) posted negative free cash flows of $182 million in 1Q17. The company attributed negative cash flows to higher working capital.
Analysts see a big spike in U.S. Steel Corporation’s 2Q17 EBITDA. The company is expected to post an adjusted EBITDA of $294 million in 2Q17.
AK Steel (AKS) generated adjusted EBITDA of $143 million in 1Q17—compared to $151 million in 4Q16 and $81 million in 1Q16.
Contract pricing could be a tailwind for steel companies in the coming quarters especially if spot steel prices come under more pressure.
ArcelorMittal reported an average selling price of $649 per metric ton in 1Q17—compared to $589 per metric ton in 4Q16 and $520 per metric ton in 1Q16.
Looking at U.S. Steel Corporation’s 2017 guidance, the company expects its 2017 US flat-rolled shipments to be 10 million tons.
AK Steel expects its 2Q17 steel shipments to be flat compared to 1Q17. The company expects its automotive shipments to be flat YoY in 2017.
U.S. Steel Corporation shipped 3.65 million tons of steel in 1Q17. It shipped 3.76 million tons of steel in 4Q16 and 3.59 million tons of steel in 1Q16.
The 1Q17 earnings season is nearly over. Most steel companies have reported their earnings. It has been a mixed earnings season for steel companies (XME).
Commodity producers don’t have much control over commodity prices. When commodity prices start falling, high-cost producers become unprofitable much sooner.
AK Steel (AKS) has been among the worst-performing steel stocks (MT) (STLD) in 2017 with year-to-date losses of more than 46% as of May 17.
In this series, we’ll look at the outlook for metals and mining stocks amid the current market dynamics.
John Ferriola, Nucor’s CEO, noted that he sees some downward pressure on scrap prices.
US steelmakers such as U.S. Steel Corporation (X), AK Steel (AKS), and Nucor (NUE) stand to gain from duties against imported steel products, as they help them protect their turf from foreign steelmakers.
The United States (SPY) imported ~3.1 million metric tons of steel products in March 2017, a year-over-year rise of 30.6%. This was the highest yearly rise we’ve seen since January 2015.
On May 8, 2017, the spread between domestic and world export prices was ~$190 per metric ton for HRC, while the spread for CRC was ~$271 per metric ton.
According to data compiled by Metal Bulletin, US HRC prices ended 2016 in the ballpark of $600 per ton.
Despite an accounting change that would lower the company’s 2017 operating expenses by ~$175 million and a decline in raw materials costs, U.S. Steel has cut its 2017 profit guidance.