AK Steel (AKS) Earnings And Sales Beat Estimates In Q1

AK Steel (NYSE:AKS) topped earnings estimates in first-quarter 2017. The steel maker’s earnings of 19 cents per share for the quarter surpassed the Zacks Consensus Estimate of 15 cents. The company posted a loss of $13.6 million or 8 cents per share in the year-ago quarter.

Total operating costs in the reported quarter fell around 3.4% year over year to roughly $1.4 billion.

The company recorded net sales of $1,533.4 million for the quarter, up 1% from the year-ago quarter. Sales surpassed the Zacks Consensus Estimate of $1,475 million.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

Pricing and Shipments

Shipments for the quarter were down around 10% year over year to 1,486,900 tons, affected by the company's move to reduce sales of lower margin products. Selling price per ton rose 11.8% year over year to $1,022 in the quarter due to higher average selling prices on both contract and spot market sales, higher surcharges on specialty steel products, and an improved product mix.

Financials

AK Steel exited the quarter with cash and cash equivalents of $185.7 million, a roughly 64.3% year-over-year rise. Long-term debt fell roughly 28% year over year to around $1.7 billion. Cash flows from operating activities were $36.3 million in the reported quarter.

Outlook

For second-quarter 2017, AK Steel expects adjusted EBITDA margin to be slightly higher than the prior-year quarter, but down from the first quarter. The changes reflect a slight reduction in automotive shipments and higher raw material costs and also takes into account an expense of $3.4 million related to the redemption of 2020 notes in May. The company’s guidance excludes any impact of unrealized mark-to-market changes in iron ore derivatives.

Price Performance

The AK Steel's shares rallied 23.8% in the last 12 months, outperforming the Zacks categorized Steel-Producers industry’s gain of 16.7%.

Zacks Rank & Key Picks

AK Steel currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the steel space include United States Steel Corporation (NYSE:X) , ArcelorMittal (NYSE:MT) and Nucor Corporation (NYSE:NUE) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Steel has an expected long-term growth of 8%.

ArcelorMittal has an expected long-term growth of 11.51%.

Nucor has an expected long-term growth of 12%.

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