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
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
Fri, Aug. 19, 11:20 AM
- KeyBanc's Philip Gibbs says he's incrementally cautious on the U.S. carbon steel market outlook due to slowing demand and Q4 supply risks. He downgrades AK Steel (AKS -5.7%) to Underweight from Sector Weight.
- The $4 price target compares to the current level of $4.87.
- See also: Steel names struggle as KeyBanc turns bearish (Aug. 19)
Tue, Aug. 9, 6:26 PM
- U.S. Steel (NYSE:X) fell 6% in today's trading following its 17M-share offering; Axiom Capital’s Gordon Johnson, who has been bearish on the stock, then piled on by saying the impact of tariffs on steel prices already is starting to fade.
- Johnson believes few realize - judging by the strength in U.S. steel stocks during recent months - that the resurgence in hot rolled coil steel imports into the U.S. began before the final U.S. action was rendered.
- Sheet/strip/bar HRC imports into the U.S. from the seven countries targeted in March 2016, when the preliminary decision was rendered, totaled 275.7K metric tons, falling to 174.8K tons in April following the preliminary tariffs, rebounding to 292.4K tons in May and exiting July at 311.6K tons, significantly above pre-preliminary levels.
- Other steel and iron ore producers also fell today: AKS -6.4%, NUE -1.3%, STLD -1.4%, CLF -4.5%, MT -0.7%.
Wed, Jul. 27, 9:23 AM
Tue, Jul. 26, 6:54 PM
- U.S. Steel (NYSE:X) +4.1% AH after reporting a narrower than expected Q2 loss and saying it expects FY 2016 EPS of ~$0.34.
- The company expects ~$850M in adjusted EBITDA for the full year, compared with its April outlook of nearly $400M, saying "the significant improvements we have made to our earnings power through our Carnegie Way transformation will become more apparent as market prices recover from the very low levels at the end of 2015."
- U.S. Steel says pricing increases contributed to a strong Q2, and expects more price improvement in H2 of the year; its European segment posted its best results in nearly eight years, its flat-rolled segment returned to profitability, and an improving cost structure helped margins.
- Steel names AK Steel (NYSE:AKS), Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD) and Reliant Steel (NYSE:RS) have reported better than consensus earnings this quarter on the heels of surging steel prices.
Tue, Jul. 26, 3:47 PM
- AK Steel (AKS +13.5%) surges after Q2 earnings easily beat analyst estimates, and adjusted EBITDA of $99.3M, or 6.7% of sales, more than doubled from last year's adjusted EBITDA of $47.6M, or 2.8% of sales.
- AKS says Q2 shipments fell 14% Y/Y to 1.55M tons from 1.81M tons a year ago, as its decision to reduce exposure to the commodity carbon steel spot market resulted in a 48% decline in shipments to the distributors and converters markets.
- However, shipments of higher value coated products, which are sold mostly to the automotive market, rose to 53% of total shipments in Q2, up from 45% a year ago.
- AKS says Q2 selling prices improved 2.8% Y/Y to $957/ton, vs. $931/ton a year earlier; total Q2 operating expenses fell 15%.
- The favorable results are boosting U.S. Steel (X +8.9%) ahead of the latter's Q2 earnings report after the close today, perhaps with an assist from Allegheny Tech's (ATI +19%) better than expected Q2 results.
Tue, Jul. 26, 8:34 AM