Summary

AK Steel reported strong EPS and sales growth. The problem is that both numbers came in below expectations.

Q4 is expected to see flat shipments growth and lower selling prices.

I remain on the sidelines as I expect the pressure on the company to rise even further.

AK Steel (AKS) did it again. The company reported rising sales, net income and stronger shipments. This is everything I had hoped for. However, this time the problem is that these numbers came in way below estimates. It was not even close. Moreover, it seems that the company’s expectations of a strong economy are not being bought. Traders caused an ugly after-earnings sell-off which I think should be avoided at all costs. There is no value here. At least not yet.

 

Earnings And Sales Miss

First and foremost, AK Steel reported the strongest adjusted third quarter earnings since Q3 of 2016. Third quarter EPS came in at $0.21 which is significantly higher than the adjusted EPS of $0.02 in Q3 of 2017. Personally, I am a bit disappointed that EPS is still below $0.30. I had hoped that AKS would have been able to push EPS up above 2016 levels after being in an economic/commodity upswing since Q1 of 2016. It also seems that the trend is losing some momentum.

Sales came in at $1,735 million which is a 16% increase compared to Q3 of 2017. 16% is not that bad at all. The problem is that expectations were at $1,821 million, which means the company had one of the worst sales misses in years.