AK Steel (AKS) Reaches New Labor Deal At Rockport Works

AK Steel Holding Corporation (NYSE:AKS) has reached a four-year labor agreement with the members of the United Auto Workers (UAW) Local 3044. This new deal covers about 319 hourly production employees at the company's Rockport Works, Indiana.

The contract which was ratified via voting on Sep 27 will be in effect till Sep 30, 2021. The agreement provides a competitive labor contract that is in the best interest of the company and its workforce.

Shares of AK Steel have lost 10.5% over the past three months, underperforming the industry’s 5.4% gain.

The company expects shipments in the third quarter to be relatively flat compared to the second as higher shipments of the carbon distributing and converting market are expected to be offset by lower automotive shipments. Average selling price in the third quarter is expected to be modestly lower than the second. The expected decline assumes a change in the mix of shipments related to an anticipated reduction in automotive shipments and decline in raw material surcharges.

The company’s sustained initiative to manage costs amid a challenging operating environment is expected to lend support to its bottom line. AK Steel is looking for cost-saving opportunities in 2017 through a number of means including process improvement, headcount cuts, reduction in process time and procurement activities.

AK Steel also remains focused on expanding its core automotive business in 2017. The company is laying importance on de-emphasizing commoditized products and launching new value-added products. As part of this strategy, the company, last year, launched Nexmet — an innovative product range of high-strength steel for use in automotive light weighting applications. The products are expected to greatly benefit automotive manufacturers and reinstate the company’s focus on innovation and technology for product development.

The acquisition of Precision Partners is also in sync with AK Steel's commitment to broaden its portfolio of high-value products and processes and reinforces collaboration with the company’s automotive market customers.

However, AK Steel remains exposed to weakness in electrical steel pricing in the overseas markets. Prices remain under pressure in the international markets due to global overcapacity. The company expects the global electrical steel market to remain volatile in the near future due to production overcapacity.

AK Steel Holding Corporation Price and Consensus

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic material space are The Chemours Company (NYSE:CC) , FMC Corporation (NYSE:FMC) and Air Products and Chemicals, Inc. (NYSE:APD) .

Chemours has expected long-term earnings growth of 15.5% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC has expected long-term earnings growth of 11.3% and flaunts a Zacks Rank #1.

Air Products has expected long-term earnings growth of 12.1% and carries a Zacks Rank #2 (Buy).

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>