AK Steel Holding Corporation (AKS) Stock: Will Gains Continue?

AK Steel Holding Corporation (NYSE: AKS)

AK Steel had an explosive day yesterday after reporting its results for the second quarter. After a slight morning correction, the stock is back on the upward trend and remains well into the green. However, will these gains continue? Today, we’ll talk about what we saw from the earnings report, what we’re seeing in the market, and what we can expect to see from AKS moving forward.

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AKS Blows Away Expectations

As mentioned above, AK Steel reported its results for the second quarter yesterday. While revenue slightly missed the mark, earnings were overwhelmingly positive, leading to investor excitement. Here’s what we saw from the report:

  • Revenue – In terms of top line revenue, AKS slightly missed the mark. During the quarter, analysts expected that the company would generate revenue in the amount of $1.53 billion. However, the company actually generated revenue in the amount of $1.49 billion during the second quarter.
  • Earnings Per Share – While revenue did, indeed, miss its mark, AKS did incredibly well when it came to earnings per share. During the second quarter, analysts expected that the company would generate a loss of $0.02 per share. However, the company actually generated earnings in the amount of $0.08 per share. Proving to beat analyst expectations by $0.10 per share.

Following the release of the earnings report, Roger K Newport, CEO at AK Steel, gave this statement:

Our strategic decision to reduce exposure to commodity spot markets, optimize our footprint and focus on higher value products continued to show positive results as we achieved another quarter of significant improvement… We continue to make operational improvements and relentlessly pursue margin enhancements, and we are seeing the benefit of these actions in our financial results.”

How The Market Reacted To The News

As mentioned above, following the release of earnings, AKS exploded in the market. This morning, we saw a slight correction from overnight highs. However, the stock continues to head upward at the moment. Currently (1:03), the stock is trading at $6.60 per share after a gain of $0.42 per share (6.80%) thus far today.

Will These Gains Continue?

When it comes to AK Steel, I have a relatively mixed opinion of what we can expect to see moving forward. While we may see further gains in the short run thanks to the strong results, the long-run picture doesn’t look so good.

At the moment, AKS is working to reduce its exposure to commodity spot markets. However, as a company that primarily makes its money through the trade of steel, it’s impossible for the company to completely get rid of its reliance on the spot-market price. At the moment, and for some time now, steel demand is on the downtrend. In China, the world’s largest consumer of basic materials, demand is down. This is the same when we look around the world. Unfortunately, weak demand leads to weak prices. At the end of the day, AKS has quite a bit of headwind to get through here.

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What Do You Think?

Where do you think AKS is headed moving forward and why? Join the discussion at TalkTRENDZ!

[Image Courtesy of Public Domain Pictures]

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