AK Steel (AKS) has lost more than 44% so far in 2017. The stock along with U.S. Steel (X) were the frontrunners in “Trump trade.” However, as the initial euphoria has given way to realism, both these stocks have seen downwards price action this year. In U.S. Steel’s case, its big 1Q17 earnings miss triggered a sell-off, and the stock saw its worst single-day fall.
AK Steel stock has been weak for the most part of 2017. The stock made a closing high of $11.11 on January 4 and slid to its 2017 closing low of $5.11 on August 11. The stock has recovered slightly from its 2017 lows but is still trading with significant yearly losses. AK Steel’s price action has lagged most of its peers (XME). For instance, Nucor (NUE) and Steel Dynamics (STLD) are trading with YTD (year-to-date) losses of 6.7% and 2.3%, respectively.
If we look at financial performance, AK Steel managed to beat consensus earnings estimates in both 1Q17 and 2Q17. US steel prices have also been strong in 2017 and are roughly 5% higher as compared to what we saw at the beginning of the year. So, what’s making markets apprehensive about AK Steel? In this series, we’ll look at AK Steel’s outlook amid the current market scenario. We’ll look at key opportunities and threats that AK Steel could face in the remaining part of 2017.
Let’s begin by looking at why markets are apprehensive about AK Steel.