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AK Steel: Stacking Q4 Estimates Against Company Guidance

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Oct. 11 2020, Updated 12:33 p.m. ET

AK Steel’s guidance

In this article, we’ll look at analysts’ estimate for AK Steel’s (AKS) fourth-quarter revenue and stack it against the company’s guidance. Steel Dynamics (STLD), which posted its fourth-quarter earnings results on January 22, posted lower-than-expected revenue. However, its bottom line was better than expected.

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Fourth-quarter estimates

Analysts expect AK Steel to post revenue of $1.70 billion in the fourth quarter. The company posted revenues of $1.73 billion in the third quarter and $1.49 billion in the fourth quarter of 2017. For steel companies such as U.S. Steel Corporation (X) and ArcelorMittal (MT), revenue is a function of shipments and average steel selling prices. While AK Steel didn’t provide revenue guidance, it did share its guidance on shipments and average selling prices during its third-quarter earnings call.

AK Steel’s guidance

During its third-quarter earnings call, AK Steel said, “We estimate that our fourth quarter flat-rolled steel shipments will be essentially flat compared to the third quarter, as the seasonal slowdown in automotive shipments is offset by strong demand from the distributor and converter market, which include spot market opportunities.” The fourth quarter is seasonally weak for US steel demand (XME). Furthermore, demand from AK Steel’s core automotive end market is typically low in the quarter.

In terms of average selling prices, AK Steel said, “Due to the shift in mix, we expect that our average selling price will decline by about 2% to 3%.” AK Steel’s revenue estimates look to be in line with its guidance.

Along with AKS’s top line, we also need to look at its bottom line. In the next article, we’ll see what analysts are projecting for AK Steel’s fourth-quarter profitability.

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