AK Steel (AKS, Financial) recently released its results for the third quarter. The company posted unimpressive results. However, the company’s top line was in line with estimates. The growth in revenue came mainly due to the acquisition of Severstal Dearborn, which it completed in September. Let us have a look at the overall business of the company.
Performance and more
In the recently reported quarter, AK Steel reported a net loss of $7.2 million. However, the company is making efforts for a turnaround as a result of which the net loss narrowed from $31.7 million. Further, AK Steel reported revenue of $1.59 billion which topped analysts’ estimates of $1.48 billion. On the earnings front, AK Steel posted EPS of $0.12 per share which also topped consensus estimates of $0.09 per share.
AK Steel is improving, the recent results are a perfect example in front of us which reveals that the company’s turnaround efforts are taking shape. The company had been struggling in the past as its shares decreased more than 9% since the start of fiscal year however, the success of its turnaround efforts can be on the stock market where the stock rose more than 62% in the last one year. AK Steel has taken many key steps in the past which turned out to be a success key for it.
Under this, the most important step by AK Steel was the acquisition of Severstal Dearborn which helped the company overtime in improving its fundamentals. With this AK Steel is also seeing good increase in the shipments which is also helping it.
Customer focus
AK Steel is customer focused. It is always aligned to serve its customers better than any other steel company. The company has a huge customer base due to high quality carbon, stainless electrical steel products. The company also excels in superior customer service before and after sales. Due to this AK Steel is ranked first by the survey conducted by Jacobson & associates in customer satisfaction. This reveals that the company is in good terms in the market and with the growing customer base the company is expected to see good growth in the top line in the coming quarters.
AK Steel is seeing good opportunities in the automotive and electrical segment. There is a growing demand for the automotive light vehicle. It is further estimated that the NAFTA light vehicle production for 2014 will increase. To meet this growing demand, it is providing more carbon exposed and unexposed automotive and more stainless bright trim products and more automatic exhaust products. In addition, AK Steel is also finding good opportunities in the electrical segment as well. The Company’s electrical steel products are critical in transporting energy. The company is also encourage by the demand it is seeing with this business within the NAFTA region.
AK Steel is seeing good orders for GOES it again believes that this will improve its business despite challenges in the weather. It is also seeing good growth on the international front as well. AK Steel is seeing stronger demand for the highest efficiency electrical steel products. In addition, AK Steel expects to attain financial stability soon. It is expecting lower cash needs in future. It is expecting more than $300 million decrease in the cash commitments from last year.
Conclusion
Looking at the fundamentals, AK Steel doesn’t have a trailing P/E and Forward P/E as the company is still making losses. But the prospects looks strong and it indicates that the company will soon get over this weakness. Its earnings are not so impressive in the future as well. its earnings are growing at a CAGR of 5.00% which is close to the industry average of 5.56%. Considering all these facts and statistics, I would like to suggest the investors to stay away from the stock and wait for it to show some positive growth signs.
