AK Steel (AKS) Q3 Earnings And Sales Fall Short Of Estimates

AK Steel Holding Corporation (NYSE:AKS) reported net income of $2.8 million or a penny per share in the third quarter of 2019, down 96% from $67.2 million or 21 cents in the prior-year quarter. Its earnings per share missed the Zacks Consensus Estimate of 4 cents.

Net sales of $1,535.5 million in the quarter fell around 11.5% year over year and missed the Zacks Consensus Estimate of $1,655.1 million.

Per the company, the downside was mainly caused by lower shipments to the distributors and converters market along with a sharp decline in carbon spot market prices.

AK Steel Holding Corporation Price, Consensus and EPS Surprise

Pricing and Shipments

Flat-rolled steel shipments in the quarter were down around 8.5% year over year to 1,303,000 tons. Average selling price per ton for flat-rolled steel was $1,067 compared with $1,114 in the year-ago quarter.

Financials

AK Steel exited the quarter with cash and cash equivalents of $30.8 million, down 34.8% year over year. The company’s long-term debt declined around 3.2% year over year to $1,969.7 million.

Cash flows from operating activities were $192.5 million in the first nine months of 2019, down 23% year over year.

Guidance

AK Steel trimmed its profit forecast for 2019, factoring in the change in hot-rolled carbon spot market pricing. The company now expects net income of $26-$41 million or 8-13 cents per share for the year, down from $41-$61 million or 13-20 cents per share mentioned earlier.

The company projects adjusted net income of $103-$118 million or 32-37 cents per share for 2019, down from $118-$138 million or 37-44 cents per share stated previously.

Moreover, adjusted EBITDA is expected between $450 million and $465 million for the year, down from $470-$490 million mentioned earlier.

AK Steel anticipates lower order volume and the strike at General Motors Company (NYSE:GM) to lead to a decline in flat-rolled shipments to 5.3-5.4 million for the year.

Price Performance

Shares of the company have gained 18.6% year to date against the industry’s 12.2% decline.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (NYSE:KGC) , and Kirkland Lake Gold Ltd. (TSX:KL) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 210% for 2019. The company’s shares have surged 73.9% in the past year.

Kirkland Lake Gold has an estimated earnings growth rate of 93.4% for the current year. Its shares have moved up 126% in the past year.

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