AK Steel (AKS - Free Report) has wrapped up the purchase of Precision Partners Holding Company for $360 million in cash. The deal was announced last month.
Ontario-based Precision Partners is a leading North American automotive market company that offers engineering, tooling, die design and hot and cold stamped steel parts. The entity employs over 1,000 employees across eight plants in Ontario, Alabama and Kentucky and has a highly experienced leadership team.
The buyout combines AK Steel’s innovation in materials and metals-forming and Precision Partners' tooling and stamping technology and advanced capabilities.
The acquisition is in sync with AK Steel's commitment to broaden its portfolio of high-value products and processes and also advances the company’s focus on the rapidly growing automotive lightweighting industry and its position in advanced high strength steels. It also reinforces collaboration with the company’s automotive market customers.
Shares of AK Steel have gained 2.1% over a year, underperforming the industry’s 29.1% rally.
AK Steel topped earnings and sales estimates in second-quarter 2017. Its earnings of 19 cents per share surpassed the Zacks Consensus Estimate of 13 cents. Revenues of $1,557.2 million for the quarter also came ahead of the Zacks Consensus Estimate of $1,530 million.
AK Steel remains focused on expanding its core automotive business. The company gets a large chunk of its sales from the automotive sector.
AK Steel is also laying importance on de-emphasizing commoditized products and launching new value-added products. As part of this strategy, the company, last year, launched Nexmet – an innovative product range of high-strength steel for use in automotive lightweighting applications. The products are expected to greatly benefit automotive manufacturers and reinstate the company’s focus on innovation and technology for product development.
The company also remains committed to reduce cost. It is looking for cost saving opportunities in 2017 through a number of means including process improvement and reduction in process time and procurement activities.
AK Steel currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-placed companies in the basic materials space include POSCO (PKX - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and BASF SE (BASFY - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
POSCO has an expected long-term earnings growth of 5%.
Kronos has an expected long-term earnings growth of 5%.
BASF has an expected long-term earnings growth of 8.6%.
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