AK Steel Beats Earnings, Estimates Are Up

AK Steel Holding Corp.'s (AKS) share price has recently slid lower, but that is not a reflection of the company's strong fundamental profile. AK just reported another great quarter in which revenue was up big from last year. Estimates continue to advance, and at these levels, this stock looks like a bargain.

AK Steel Holding Corporation, through its subsidiaries, produces finished steel products and offers its products domestically, in Canada, Mexico and Western Europe. AK Steel was founded in 1900, carries a market cap of $7.85 billion and is headquartered in West Chester, Ohio.

Second-Quarter Results

AK Steel reported second-quarter results on July 22 that easily surpassed analyst expectations. Sales were up 20% from last year to $2.24 billion. Net income came in at $145.2 million, an impressive gain from $109.9 million last year. This produced earnings of $1.29 per share, easily ahead of analyst expectations of $1.15 per share.

For the first six months of the year, AK Steel said profit rose nearly 43% to $246.3 million from $172.6 million in the first six months of last year.

AK Steel said it plans to raise prices by 10% in the third quarter because of higher energy and raw materials costs, reflecting an inflationary dynamic that is effecting most companies models.

A History of Surprising

This is the fourth time AK Steel has surprised and beaten analyst estimates in the last four quarters, having done so by an average 22-25%.

Estimates Are Up

As demand for steel has remained strong, analysts have continued to raise their earnings projections. The current-year estimate is pegged at $5.03, up from $4.39 90 days ago.

The Chart

Shares of AKS have recently traded sharply off of their highs, dropping to $50 from over $72 in June. As it stands, this stock is pressuring a key support area right around $49. Take a look at the chart below.