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What's in the Offing for AK Steel (AKS) This Earnings Season?
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AK Steel Holding Corporation is slated to release third-quarter 2018 results, after markets close on Oct 25.
The company reported net income of $56.6 million or 18 cents per share in the second quarter of 2018, down roughly 27% from net income of $77.2 million or 24 cents in the prior-year quarter.
Adjusted earnings of 22 cents per share missed the Zacks Consensus Estimate by a penny.
Net sales of $1,746.6 million rose around 12% year over year, topping the Zacks Consensus Estimate of $1,737 million.
The company topped earnings estimates in two of the trailing four quarters, the average positive surprise being 54.9%.
Shares of AK Steel have lost 29.2% in a year compared with the industry’s fall of 8%.
Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Factors at Play
AK Steel, in its second-quarter call, said that it expects market conditions to remain strong in the third quarter. It expects flat-rolled shipments to be 5% higher from the second quarter. It anticipates average selling price per flat-rolled ton to be $1,105 in the third quarter. The company also expects an improvement in pricing and shipment to be, in part, offset by the outage at one of its temper mills. As a result, it expects margins to improve around 50 basis points from the second quarter of 2018.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $1,821 billion, reflecting an increase of 21.8% from the year-ago quarter.
AK Steel should benefit from healthy demand in the automotive market. The company is looking to continue to grow its core automotive business. The acquisition of Precision Partners boosted the company’s focus on the rapidly growing automotive light weighting industry and its position in advanced high value steels. The company is also actively pursuing cost-cutting actions, which should support its margins.
However, the company is witnessing significant volatility in raw material costs. AK Steel saw an uptick in year-over-year costs for certain raw materials in the first two quarters of 2018. The same is likely to continue in the third quarter.
AK Steel also expects to bear planned outage costs of around $8 million for the third quarter. For 2018, the company expects expenses associated with planned outages to be around $50 million.
AK Steel Holding Corporation Price and EPS Surprise
Our proven model does not conclusively show a beat for AK Steel this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Earnings ESP: Earnings ESP for AK Steel is currently pegged at -1.33%. This is because the Most Accurate Estimate stands at 22 cents while the Zacks Consensus Estimate is at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AK Steel currently carries a Zacks Rank #3 which, when combined with a negative ESP, makes surprise prediction difficult.
Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are a few companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
CF Industries Holdings, Inc. (CF - Free Report) has an Earnings ESP of +12.07% and a Zacks Rank #1.
Domtar Corporation has an Earnings ESP of +1.32% and a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +6.95% and a Zacks Rank #3.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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What's in the Offing for AK Steel (AKS) This Earnings Season?
AK Steel Holding Corporation is slated to release third-quarter 2018 results, after markets close on Oct 25.
The company reported net income of $56.6 million or 18 cents per share in the second quarter of 2018, down roughly 27% from net income of $77.2 million or 24 cents in the prior-year quarter.
Adjusted earnings of 22 cents per share missed the Zacks Consensus Estimate by a penny.
Net sales of $1,746.6 million rose around 12% year over year, topping the Zacks Consensus Estimate of $1,737 million.
The company topped earnings estimates in two of the trailing four quarters, the average positive surprise being 54.9%.
Shares of AK Steel have lost 29.2% in a year compared with the industry’s fall of 8%.
Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Factors at Play
AK Steel, in its second-quarter call, said that it expects market conditions to remain strong in the third quarter. It expects flat-rolled shipments to be 5% higher from the second quarter. It anticipates average selling price per flat-rolled ton to be $1,105 in the third quarter. The company also expects an improvement in pricing and shipment to be, in part, offset by the outage at one of its temper mills. As a result, it expects margins to improve around 50 basis points from the second quarter of 2018.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $1,821 billion, reflecting an increase of 21.8% from the year-ago quarter.
AK Steel should benefit from healthy demand in the automotive market. The company is looking to continue to grow its core automotive business. The acquisition of Precision Partners boosted the company’s focus on the rapidly growing automotive light weighting industry and its position in advanced high value steels. The company is also actively pursuing cost-cutting actions, which should support its margins.
However, the company is witnessing significant volatility in raw material costs. AK Steel saw an uptick in year-over-year costs for certain raw materials in the first two quarters of 2018. The same is likely to continue in the third quarter.
AK Steel also expects to bear planned outage costs of around $8 million for the third quarter. For 2018, the company expects expenses associated with planned outages to be around $50 million.
AK Steel Holding Corporation Price and EPS Surprise
AK Steel Holding Corporation Price and EPS Surprise | AK Steel Holding Corporation Quote
Earnings Whispers
Our proven model does not conclusively show a beat for AK Steel this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Earnings ESP: Earnings ESP for AK Steel is currently pegged at -1.33%. This is because the Most Accurate Estimate stands at 22 cents while the Zacks Consensus Estimate is at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AK Steel currently carries a Zacks Rank #3 which, when combined with a negative ESP, makes surprise prediction difficult.
Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are a few companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
CF Industries Holdings, Inc. (CF - Free Report) has an Earnings ESP of +12.07% and a Zacks Rank #1.
Domtar Corporation has an Earnings ESP of +1.32% and a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +6.95% and a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>