AK Steel Holding CorpNYSE
AK Steel: First-Lien Bonds At 80 And Unsecured Bonds At 35 May Rise Sharply
Swaraj Chowdhury, CFA
Swaraj Chowdhury, CFA
AK Steel: Unsecured Notes At 65 And Stock At $3 Are Attractive For Aggressive Investors
Swaraj Chowdhury, CFA • 10 Comments
Swaraj Chowdhury, CFA • 10 Comments
Today, 9:14 AM
Yesterday, 4:33 PM
- AK Steel (NYSE:AKS) -7.2% AH after announcing a 65M-share public offering, with an underwriters option to purchase up to an additional 9.75M common shares.
- AKS says it plans to use the proceeds to repay outstanding borrowings under its $1.5B asset-based revolving credit facility and for general corporate purposes.
- Shares have gained 6% since announcing Q3 earnings before Tuesday's open.
Yesterday, 9:47 AM
- AK Steel (AKS +5.3%) charges out of the gate after BofA Merrill Lynch upgrades shares to Buy from Underperform with an $8 price target, doubled from $4, following yesterday's sizeable Q3 earnings beat.
- BofA's Timna Tanners thinks U.S. steel prices could spike, as her research shows domestic scrap steel prices might rise $30-$40/ton next month due to stronger demand; combined with the company's focus on more premium products, the analyst raises her 2017 EPS estimate for AKS to $0.90 from a prior $0.55.
- BofA also upgrades Steel Dynamics (STLD +2.5%) to Buy from Neutral after reporting its own strong Q3 results a week ago.
Tue, Oct. 25, 1:14 PM
- U.S. steelmakers are higher after AK Steel (AKS +6.2%) and Schnitzer Steel (SCHN +2.3%) both reported stronger quarterly earnings, as the companies benefited from cost-cutting measures.
- AKS reported better than expected Q3 earnings as total operating expenses fell 19% Y/Y; revenues fell 15% Y/Y to $1.45B as shipments fell 24%, partly related to a decision to focus less on less profitable commoditized products, but the selling price per ton rose 11% to $1,016, due to a better product mix and a more favorable selling environment.
- SCHN posted above consensus FQ4 earnings and revenues as overhead costs declined 20% Y/Y; ferrous sales volumes of 914K tons and nonferrous sales volumes of 153M lbs. were 2% and 13% lower Y/Y, respectively.
- Also: X +2%, STLD +0.8%, WOR -0.1%, RS -0.6%, NUE -0.7%.
Tue, Oct. 25, 8:35 AM
Mon, Oct. 24, 5:30 PM
- ABG, AGR, AKS, ASTE, ATI, AXE, BAX, BHI, BPOP, CAT, CIT, CNC, CPLA, CTG, CVLT, CYNO, DD, EAT, EDU, ETR, FBC, FBP, FCAU, FCX, FELE, GBX, GLW, GM, GPK, HUBB, IIVI, JBLU, JNS, KEY, KKR, LLY, LMT, LPT, MAS, MDSO, MINI, MMC, MMM, MRK, NCI, NLSN, NVS, PCAR, PG, PII, PNR, R, RTIX, S, SAVE, SCHN, SERV, SHW, SIR, ST, STAY, TNC, UA, USG, UTX, VLO, WAB, WAT, WDR, WHR, WSO
Thu, Oct. 20, 12:36 PM
- Three steel companies - Steel Dynamics , Reliance Steel and Nucor - have reported earnings since yesterday’s close, with three sharply different results.
- Steel Dynamics (STLD +2.7%) is higher after reporting Q3 earnings that more than doubled as revenues rose 7.7% Y/Y to $2.1B, and gross profit margin improved to 19.4% from 11.7% a year ago, driven by a market rebound and a drop in Chinese imports.
- Reliance Steel (RS -6%) is sinking after Q3 results missed analyst estimates and guided Q4 EPS below consensus, now seeing EPS of $0.65-$0.75 vs. $0.99 analyst consensus estimate, and expecting Q4 tons sold to fall 5%-7% Q/Q and average selling prices to drop by 1%-3% Q/Q.
- Nucor (NUE +0.2%) has recovered from earlier losses to edge into the green after Q3 results missed expectations and warning that Q4 earnings likely will decrease "notably" from Q3 because of lower margins in the steel mills segment, partly due to typical Q4 seasonality.
- U.S. Steel (X +4.9%), which reports earnings on Nov. 2, and AK Steel (AKS +4.3%), which reports on Oct. 25, are higher.
Thu, Oct. 13, 2:33 PM
- Even without the latest gloomy export data from China, shares of U.S. Steel (X -5.5%) might have dropped because of falling steel prices.
- Axiom Capital’s Gordon Johnson says U.S. hot rolled coil steel prices have dropped to $496/ton, below “the psychologically [important] $500 threshold... this is not good for U.S. steel mills.”
- Also: SLX -2.9%, MT -2.3%, AKS -4.2%, STLD -1.9%, RS -1.7%, ATI -3%, WOR -1.6%.
Mon, Oct. 3, 12:34 PM
- Freeport McMoRan (FCX -0.5%), Barrick Gold (ABX -2.5%) and Pan American Silver (PAAS -0.5%) are upgraded to Buy from Hold at Deutsche Bank, which notes the 12% Q3 rally in commodity prices have enabled the sector to improve their balance sheets via stock issuance, debt refinancing and asset disposals.
- The firm is neutral overall in the metals group, as it continues to believe that material supply cuts still are needed in most commodities and thus does not anticipate prices continuing their upward trend.
- Deutsche Bank says its top picks are ABX and Newmont Mining (NEM -3%) in precious metals, Steel Dynamics (STLD -2.4%) in steel, and Alcoa (AA -1.1%) and Kaiser Aluminum (KALU -1.8%) in aluminum; it upgrades AK Steel (AKS -0.7%), Coeur Mining (CDE -0.8%), Teck Resources (TCK -1.5%) and Goldcorp (GG -4.2%) to Hold from Sell.
Mon, Sep. 19, 2:19 PM
- U.S. Steel (X +5%) and AK Steel (AKS +3.9%) are upgraded to Sector Weight from Underweight at KeyBanc, which says the stocks at current levels better reflect the more competitive market conditions expected in Q4 and in 2017.
- KeyBanc sees is a stronger investor appreciation for near-term and sheet supply and demand risk in 2017.
- The firm downgraded the steel stocks just a month ago, citing caution on prospects for the U.S. carbon sheet market.
Thu, Sep. 15, 6:53 PM
- Steel prices (NYSEARCA:SLX) likely will continue to move lower through year-end, Jefferies analysts say, citing "incremental weakness in raw material input costs as well as supply-side pressures from ramping capacity" at projects such as ArcelorMittal’s BF restart and Big River.
- Still, while Jefferies lowers price targets on all the stocks in its coverage except three, it awards Buy ratings to Steel Dynamics (NASDAQ:STLD) and Nucor (NYSE:NUE); the firm sees STLD as its the top pick in the sector and NUE as the most defensive, saying the companies boast relatively lower cost operating structures and less levered balance sheets.
- Meanwhile, Hold-rated U.S. Steel (NYSE:X) and AK Steel (NYSE:AKS) are highly sensitive to absolute steel prices and face margin risk from surging coking coal prices, so the shares likely will face the brunt of the downside pressure, Jefferies says.
- Also rated Hold: CMC, ZEUS, RS, RYI, TMST, WOR.
Thu, Sep. 15, 3:32 PM
Mon, Sep. 12, 2:18 PM
- AK Steel (AKS +2.8%) spikes higher after the U.S. Commerce Department says it made a preliminary finding that imports of stainless steel sheet and strip from China are being dumped in the U.S. market at below fair value.
- The DoC set preliminary antidumping duties ranging from 63.86% to 76.64%.
- AKS and Allegheny Tech (ATI +3.9%) are two of the companies that sought a U.S. investigation, but other steel firms also are higher: X +2.4%, MT +3.1%, NUE +1.8%, CLF +0.9%, STLD +0.8%.
Mon, Aug. 29, 10:45 AM
- AK Steel (AKS +1.3%) discloses a settlement agreement with Magnetation LLC to terminate the iron ore pellet offtake agreement between the companies and to wind down Magnetation's business.
- AKS owns a 49.9% stake in Magnetation, which had hoped to restructure following its bankruptcy filing in May.
- The settlement requires bankruptcy court approval, with a hearing set for Sept. 27, and AKS says it plans to record a $37.5M charge during the quarter the court approves the agreement.
- In July 2015, AKS said it recorded a $256.3M writedown of its investment in Magnetation and did not expect any additional financial effect.
Mon, Aug. 22, 6:47 PM
- Citigroup initiated coverage on the steel sector (NYSEARCA:SLX) today with a positive outlook, with Buy ratings on U.S. Steel (NYSE:X) and Steel Dynamics (NASDAQ:STLD), and Neutral ratings for AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and Commercial Metals (NYSE:CMC).
- Citi sees prices for hot-rolled coil holding the $550-$600/ton range into 2017, a relatively more bullish view than the consensus which expects prices to fall quickly in H2 given relatively high price premiums vs. imports, but the firm finds support from idlings, imports and inventory.
- The firm considers US Steel the top pick for near-term upside in the sector, saying the company currently has “the highest operating leverage, highest short interest and most upside to consensus estimates."
- Citi likes STLD as one of the lowest-cost operators in the U.S. and notes that the company has been generating mill EBITDA margins five percent above the industry average over the last five-year and 10-year period.
Fri, Aug. 19, 2:00 PM