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
The Long Case For AK Steel Holding Corp.
Investment Capitalist • 22 Comments
Investment Capitalist • 22 Comments
Today, 9:23 AM
Yesterday, 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.
Yesterday, 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.
Wed, Jun. 15, 3:25 PM
- Steel companies are surging after Nucor (NUE +2.1%) released better than expected guidance and Bank of America upgraded U.S. Steel (X +8.4%) to Neutral from Underperform with an $18 price target, raised from $10, citing more stable earnings and higher steel prices.
- Nucor's upbeat commentary follows Steel Dynamics' (STLD +3.1%) upside Q2 guidance issued earlier this week, citing improved metals spread and shipments, and both of which follow May's U.S. Commerce Department ruling that it is imposing a 266% tariff on Chinese cold-rolled steel imports.
- BofA now forecasts $673M in 2016 EBITDA for U.S. Steel vs. consensus forecasts of $424M, based on the higher prices.
- The firm also praises U.S. Steel's ability to push out its debt maturities, although leverage remains steep with total debt at ~5x projected EBITDA.
- Also: AKS +8.3%, CLF +3.7%, MT +4.1%.
Wed, Jun. 15, 9:19 AM
- Nucor (NYSE:NUE) +1.6% premarket after issuing upside guidance for Q2 earnings; NUE now sees Q2 EPS of $0.65-$0.70 vs. the $0.56 analyst consensus estimate, Q1 EPS of $0.22 and year-ago quarter EPS of $0.39.
- NUE expects a "much improved" Q2 performance in the steel mills segment due to higher average selling prices and improved volumes, and notes that sheet mills have benefited from lower inventory levels in the supply chain, mainly at service centers, and decreased levels of imports.
- NUE also sees improvement in the downstream products segment due to seasonal factors and the gradual improvement in non-residential construction markets.
- Related tickers include X, AKS, STLD.
Wed, Jun. 8, 2:00 PM
Wed, Jun. 8, 10:18 AM
- AK Steel (AKS +10.5%) surges more than 10% as Credit Suisse upgrades shares to Outperform from Neutral with a $7 price target, doubled from $3.50, after the firm increases its U.S. steel price deck.
- Credit Suisse says it remains "very bullish" on the U.S. steel industry, and its new supply/demand model for the U.S. flat rolled market indicates continued deficits for value add sheet into Q3, supporting prices well above fair value levels.
- The firm raises its price targets on all steel stocks in its coverage universe except Commercial Metals (CMC +1.9%), owing to rebar spread risks.
- Steel stocks (SLX +2.8%) are broadly higher in early trading: X +6.8%, MT +3.9%, STLD +3.8%, NUE +2.4%, WOR +1.5%, ZEUS +1.4%.
Wed, Jun. 8, 9:16 AM
Mon, Jun. 6, 11:58 AM
- Steel stocks (SLX +2.1%) are higher as U.S. Treasury Secretary Lew blames China for flooding low-cost steel into the U.S. and other markets.
- Lew is urging China to cut excess steel production, as the two countries open high-level talks overshadowed by tension over the South China Sea.
- "The Chinese government is... engaged in economic warfare against the U.S. and sadly, they are winning,” Nucor (NUE +0.3%) CEO John Ferriola says in a WSJ interview, adding that China two months ago set a new production record after spending two years promising to cut production.
- Steel producers are mostly higher: X +2.9%, MT +2.1%, CLF +2.8%, AKS -1%, STLD +0.3%, RS +0.4%.
Thu, May 26, 9:18 AM| Thu, May 26, 9:18 AM | 1 Comment
Thu, May 26, 8:19 AM
- U.S. steel companies surge in premarket trading after the U.S. announced heavy anti-dumping and anti-subsidy duties on corrosion-resistant steel from China, in the latest U.S. clampdown on a glut of steel imports.
- The Commerce Department issued duties of as much as 450% on Chinese producers of corrosion-resistant steel, as well as duties of 3%-92% on producers from Italy, India, South Korea and Taiwan.
- The final U.S. anti-dumping duties on the Chinese products replace preliminary duties of 256% issued in December.
- Last week the Commerce Department issued punitive tariffs of more than 500% on Chinese cold-rolled flat steel.
- AKS +7%, X +5.6%, CLF +4.8%, NUE +2.3%, STLD +1.6% premarket.
Fri, Apr. 29, 5:35 PM
Fri, Apr. 29, 9:12 AM
- Gainers: PRGN +75%. GNW +16%. P +13%. AMZN +12%. SDRL +11%. EXPE +11%. MNST +11%. ROVI +10%. SNMX +9%. LNKD +7%. CRC +7%. DNR+7%. DRYS +7%. TIVO +6%. LGCY +6%. SHPG +5%. GPL +5%.
- Losers: BIOC -22%. GLNG -17%. EPAY -17%. MOH -15%. SRCL -15%. IMGN -14%. SYNA -11%. AKS -8%. HCLP -8%. ALR -6%. GILD -6%. RXDX -6%.
Thu, Apr. 28, 4:09 PM
- AK Steel (NYSE:AKS) -6.2% AH after announcing a public offering of 52M common shares, with an underwriters option to purchase up to an additional 7.8M shares.
- AKS says it plans to use the proceeds to repay outstanding borrowings under its $1.5B revolving credit facility.
- Now read AK Steel: Should you remain invested after 110% gains?
Tue, Apr. 26, 3:46 PM
- AK Steel (AKS +4.2%) pushes toward highs of the day following its narrower than expected Q1 loss that also was much smaller than the loss from the year-earlier quarter.
- AKS says Q1 shipments fell 5% Y/Y to 1.65M vs. 1.75M tons a year ago, mostly due to the company's strategic decision to reduce exposure to commodity products; average selling prices fell to $914/ton from $999 a year earlier and $929 in Q4 2015.
- Q1 shipments of hot rolled carbon steel products fell 34%, partly offset by a 7% increase in shipments of higher value coated products that are sold mostly to the automotive market.
- AKS also says its Q1 adjusted EBITDA jumped 41% Y/Y to $81.1M, principally due to a better product mix, operational improvements, a continuous focus on reducing costs, and lower raw material and energy costs.
- Now read AK Steel: Should you remain invested after 110% gains
Tue, Apr. 19, 3:39 PM
- Analysts at both Barclays and BofA Merrill Lynch raise their price targets for some steel industry stocks (SLX +4%), seeing industrial activity picking up for this spring and tight domestic supplies and low imports supporting higher steel prices.
- But the firm still expect pricing to come down over H2 as overseas production ramps back up and domestic scrap flows improve.
- Barclays says US Steel (X +4%) and AK Steel (AKS +4.5%) still look expensive but the stocks should benefit in the near term from the momentum driving hot rolled coil pricing; the firm raises its price targets for X to $15 from $7, AKS to $3 from $2, Steel Dynamics (STLD +1.5%) to $27 from $22, and Nucor (NUE +0.9%) to $52 from $47.
- BofA Merrill raises its stock targets for X to $9 from $1, AKS to $2.50 from $1, STLD to $27 from $24, and NUE to $55 from $50.
- However, BofA also downgrades Reliance Steel (RS -0.2%) to Underperform from Neutral, thinking the stock’s strong move has taken its valuation well above its historical EBITDA averages.
- Now read Reuters: China, major producers fail to reach steel deal
AK Steel Holding Corp. is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly-owned subsidiary, AK Steel Corp. The company's operations consist primarily of nine steelmaking and finishing plants and tubular production facilities... More
Sector: Basic Materials
Industry: Steel & Iron
Country: United States
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