Het lijkt er op dat ze met AK steel klaar zijn met naar beneden trappen,uurtje terug een portie gekocht op 5,35,dit zou mogelijk de ommekeer kunnen zijn.
AK Steel: Expect Upside To $7.50
May.18.17 | About: AK Steel (AKS)
Vladimir Zernov
Vladimir Zernov
Long/short equity
(3,932 followers)
Summary
AK Steel shares fall from $11 to $5.50.
While hopes for a major infrastructure plan have not materialized yet, the fundamentals do not justify such a punishment for the stock.
The stock has good chances for upside correction to $7.50.
AK Steel (NYSE:AKS) shares gave up almost all gains that the stock made since November 2016. The stock topped around $11 in December 2016 and started to slide, ultimately eliminating half of the company's capitalization and settling near $5.50 at the moment of writing this article.
Serious catalysts should be in play for a company's stock to lose half of its market price in less than half a year. Typically, there are three main possibilities: 1) serious downside catalyst emerged; 2) previous upside was unjustified; 3) the market has it wrong.
Let's discuss the first possibility. AK Steel had a decent first quarter, reporting earnings of $0.19 per share on revenue of $1.53 billion and easily beating analysts' expectations. The revenue shows no growth, but this is caused by the company's strategy to focus on higher-margin products. Over time, this strategy led to an increasing dependence on the domestic automotive market:
The domestic automotive market is expected to slightly decline this year compared to 2016. So far, this has not had any material effect on AK Steel. The company saw continued increase in the average selling price per ton of its products ($1022/ton in Q1 2017 vs. $998/ton in Q4 2016), driven by both improvements in the market and the product mix. So far, there are no facts that point to a sudden crash on this side of AK Steel's business. During the recent earnings call, the company stated that it expected to achieve a higher average selling price in the second quarter.