Why AK Steel failed to cheer investors with its 3Q earnings



AK Steel released its third quarter earnings

AK Steel (AKS) released its third quarter earnings on November 4. The results didn’t cheer investors. AK Steel’s share price decreased 15% after the earnings were released. On an adjusted basis, the earnings were better than analysts expected.

In this series, we’ll discuss AK Steel’s third quarter financial results. We’ll analyze how investors should play AK Steel’s fall after its third quarter results. We’ll also discuss AK Steel’s key drivers. We’ll analyze why its set for a turnaround in 2015.

manufacturing plants

AK Steel’s major operations

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AK Steel is headquartered in West Chester, Ohio. It operates steel plants and two tube manufacturing facilities spread across four states. The above chart shows AK Steel’s facilities in the U.S. AK Steel employs ~6,400 people at its various plants. The company is led by Mr. James L. Wainscott. He’s the company’s chairman, president, and CEO.

AK Steel is a global leader in the production of flat-rolled carbon, stainless steel, and electrical steel products. AK Steel gets most of its revenues from the U.S. For the past three years, more than 85% of its sales came from the U.S. The company is a leading supplier to automobile companies.

Steel plays’ third quarter earnings

AK Steel became the latest steel play to release its third quarter earnings. Other steel plays that released their earnings are:

  1. Steel Dynamics (STLD) – reported earnings per share (or EPS) of $ 0.38.
  2. Nucor (NUE) – reported EPS of $ 0.76 per share.
  3. U.S. Steel Corp (X) – reported adjusted EPS of $ 2.16. X’s share price rallied more than 10% after the third quarter results.

These three companies are part of the SPDR S&P Metals and Mining ETF (XME). In the next part of the series, we’ll learn more about AK Steel’s third quarter earnings.


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