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AK Steel’s 2019 Guidance: What You Need to Know

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Jan. 29 2019, Updated 11:05 a.m. ET

AK Steel’s 2019 guidance

During the fourth-quarter earnings release, AK Steel (AKS) provided its 2019 guidance. The company used to provide its quarterly earnings guidance during the earnings release. Now, AK Steel has shifted to providing annual guidance. Usually, Nucor (NUE) and Steel Dynamics (STLD) provide their quarterly earnings guidance 15 days before a quarter ends. U.S. Steel Corporation (X) provides annual and quarterly earnings guidance during the earnings release.

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Shipment guidance

AK Steel expects the 2019 flat-rolled shipments to be ~5.9 million tons—compared to 5.68 million tons last year. AK Steel expects its 2019 average selling prices to be similar to 2018. The company’s average selling price guidance spooked investors last year. The increase was perceived to be lower compared to the markets’ expectation.

The company expects to post an adjusted EBITDA of $515 million–$535 million this year. Among other factors, the guidance assumes average HRC (hot-rolled coil) prices of $720 per ton. AK Steel posted an adjusted EBITDA of $563 million last year and $528 million in 2017. The company’s EBITDA guidance was lower compared to analysts’ expectations.

Analysts

While AK Steel was trading higher in the after-market trading on January 28, analysts don’t seem to be impressed with the earnings. Credit Suisse lowered AK Steel’s target price from $4.5 to $4 after its earnings release. On January 28, before the earnings release, Morgan Stanley lowered AK Steel’s target price from $5 to $3. Morgan Stanley downgraded the stock from “overweight” to “underweight.” The brokerage also trimmed its target price for U.S. Steel Corporation and Cleveland-Cliffs (CLF).

Read US Steel Stocks: Analysts’ Expectations in 2019 to see how analysts are rating steel stocks this earnings season.

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