AK Steel Holding Corp. (AKS - Free Report) has launched its latest product, Tran-Cor X high permeability grain-oriented electrical steel (GOES) product family. It is ideal for use in high and ultra-high voltage power transformers.
Being the sole manufacturer of GOES products in North America, AK Steel sells to customers in the United States and around the globe. The new TRAN-COR X electrical steel is an upgraded version of the company’s existing world class Tran-Cor H product. This will help power transformer makers design to achieve higher levels of efficiency, while reducing greenhouse gas emissions due to energy loss in electricity transmission and distribution.
AK Steel has underperformed the industry it belongs to over the past six months. The company's shares have declined 8.9%, while the industry gained about 8.3%.
The company expects market conditions to strengthen in the second quarter of 2018 on a sequential basis. For second-quarter 2018, AK Steel expects flat-rolled shipments to be roughly 5% to 7% higher from the first quarter.
It anticipates average selling price per flat-rolled ton to be about $1,075 in the second quarter. The company expects pricing and volumes to improve, as a result of which, adjusted EBITDA margin is expected to grow by 1.5 to 2 percentage points sequentially.
AK Steel should benefit from the strength in the automotive market and the Precision Partners acquisition. The company is developing third-generation, advanced high-strength carbon steels for its automotive customers that are considerably stronger than current product offerings.
The company’s sustained initiatives to manage costs should also support its bottom line. It is actively pursuing cost-cutting actions and remains on track to deliver cost savings of at least $35 million in 2018 through continued operational improvements, material cost reductions and process enhancements.
However, AK Steel faces weakness in electrical steel pricing due to global overcapacity. It is also exposed to a volatile raw material pricing environment. The U.S. steel industry is also not out of the woods yet.
AK Steel Holding Corporation Price and Consensus
Zacks Rank & Stocks to Consider
AK Steel is a Zacks Rank #3 (Hold) stock.
Some better-ranked companies in the basic materials space are FMC Corp. (FMC - Free Report) , Celanese Corp. (CE - Free Report) and Koninklijke DSM NV (RDSMY - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corp has an expected long-term earnings growth rate of 16.4%. Its shares have gained around 14.4% over a year.
Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have moved up around 28.7% over a year.
Koninklijke DSM has an expected long-term earnings growth rate of 7.7%. Its shares have gained around 33.5% over a year.
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