I picked-up another 1/8 of my target position in AKS (AK Steel) today at $7.
AKS is now yielding 2.6%, and trading at a new 52 week low. I now have 3/8 of my target position goal with an average cost of $8.33. As the stock goes lower, I will continue to add to my position in 1/8 increments. S&P has a 12 month target of $17 per share based on thier Sept 17 report. Additionally, S&P rates AKS 4 our of 5 stars.
Our risk assessment reflects AKS’s exposure to
the auto industry and other cyclical markets,
along with its high ratio of total liabilities to assets
versus peers. Partially offsetting these factors are
AKS’s debt reduction and cost cutting in recent
years. – S&P
Its interesting to note that S&P considers AS a “special situation turnaround.” This is due to AKS has reduced funded debt and underfunded pension and health care liabilities. It also has cut its health care and retiree costs, thereby mitigating a sizable cost disadvantage versus other domestic steel rivals. With a new source for less expensive coke coming online within the next 60 days, AKS will be benefiting with lower costs this year.
When demand for durable goods rises, AKS will rise. When AKS reported 2010 losses of $0.54 per share, it beat the $0.678 consensus estimate loss of the 10 analysts covering the company. The analyst’s annual estimates ranged from a high of $-0.55 to a low of $-0.80, with a median estimate of $-0.69.
AKS reported 2nd quarter 2011 earnings of $0.32, missing the consensus estimate of the 13 analysts covering the company by 35.61%. In the year leading up to the announcement, the estimate had increased by 31.58%.
AKS seems inexpensive with a Price to Sales ratio of 0.1168, below the Iron & Steel industry median PS ratio of 0.31, however, their Price to Book is 1.2916, above the industry median of 0.8.
AKS pays an annual dividend of $0.20 and, at its current price, yields 2.63%, a level that is in-line with both the Iron & Steel industry average and S&P 500. Additionally, this company is in the minority as most others in this industry do not pay a dividend.
The next earnings announcement from AKS is expected the week of October 25, 2011.
AK Steel Holding Corporation (AK Holding) is a producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly owned subsidiary, AK Steel Corporation (AK Steel). AK Holding’s operations consist of seven steelmaking and finishing plants located in Indiana, Kentucky, Ohio and Pennsylvania that produce flat-rolled carbon steels, including coated, cold-rolled and hot-rolled products, and specialty stainless and electrical steels that are sold in hot band, and sheet and strip form. Its operations also include AK Tube LLC (AK Tube), a wholly owned subsidiary of the Company, which further finishes flat-rolled carbon and stainless steel at two tube plants, one located in Ohio and one located in Indiana, into welded steel tubing used in the automotive, large truck and construction markets. In addition, the Company’s operations include European trading companies that buy and sell steel and steel products and other materials.
On the downside, The Street rates AKS a D+ Sell. Just below C- Hold stating
We rate AK STEEL HOLDING CORP (AKS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its generally weak debt management, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. We rate AK STEEL HOLDING CORP (AKS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors toachieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seenin multiple areas, such as its generally weak debt management, disappointing return on equity, poor profitmargins, weak operating cash flow and generally disappointing historical performance in the stock itself.
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