Can AK Steel’s Financial Joyride Continue?


Jul. 20 2016, Published 11:06 p.m. ET

AK Steel’s 2Q16 earnings

AK Steel (AKS) had a joyride in 2016 after falling to multiyear lows in January. Steel has seen a change in fortunes this year and has been the best-performing industrial metal. Flat-rolled steel products in the US have gained ~65% so far in 2016.

Steel stocks have also followed steel prices and have moved to higher price levels. U.S. Steel Corporation (X) and AK Steel (AKS) have led the pack with YTD (year-to-date) gains of 162% and 144%, respectively. ArcelorMittal (MT) has also gained 75% YTD. The SPDR S&P Metals and Mining ETF (XME), which invests more than half of its holdings in US-based steel companies, has also returned 81% so far in 2016. The upward momentum in US steel companies is driven by higher spot steel prices, especially in the flat rolled space.

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2Q16 earnings season

Now we’re into the 2Q16 earnings season. Steel Dynamics released its 2Q16 earnings on July 18. The company posted better-than-expected earnings while slightly missing on revenues. Nucor (NUE) plans to release its 2Q16 earnings on July 21. U.S. Steel (X) and AK Steel (AKS) are expected to release their 2Q16 earnings on July 26. It will be crucial for steel companies to justify their price movements with solid 2Q16 earnings.

Series overview

In this series, we’ll explore what Wall Street is expecting from AK Steel’s 2Q16 earnings. We’ll also look at the key points that AK Steel investors should watch for in the company’s 2Q16 earnings conference call.

We’ll begin by analyzing what Wall Street expects for AK Steel’s revenues in 2Q16.


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