| What Is AK Steel’s Outlook amid Challenging Market Conditions? | |
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Investors Are Optimistic about AK Steel's 2Q15 Results (Continued from Prior Part) AK Steel’s outlook
In its 2Q15 earnings conference call, AK Steel’s (AKS) management expressed optimism regarding the company’s business. Markets also seemed to be optimistic about AK Steel’s earnings, as its share price has risen more than 25% between July 28 and July 29. However, the share price is still down ~50% since the beginning of the year. In this part, we’ll analyze AK Steel’s outlook.
AK Steel’s “DRIVEN” strategy
Earlier this year, AK Steel outlined its “DRIVEN” strategy for its business, which the above chart outlines. The company expects to increase its profit margins in 2015. However, this would depend on a host of factors like how steel imports play out in the coming months. If US steel companies like Nucor (NUE) and Steel Dynamics (STLD) are able to get positive rulings on the trade cases, it would be a big boost to the steel industry. Nucor currently forms 2.67% of the Materials Select Sector SPDR ETF (XLB).
Cash flows
AK Steel’s cash flows might further improve in 2015 and beyond. The company has no major capital expenditure in the cards. Based on the current actuarial assumption, AK Steel estimates that it will not have any pension funding requirements in 2016 and 2017.
For the current year, the company has already completed its pension funding requirements. Lower pension funding requirements would help increase AK Steel’s cash flows, which it can utilize to address its massive debt pile. If AK Steel can bring down its debt levels, it would be a big positive for the company.
AK Steel’s high exposure to the automotive sector would continue to work to the company’s advantage. AK Steel has a minuscule exposure to the energy sector, unlike some of its peer companies. AK Steel’s lower exposure makes it immune to the slowdown in steel demand from the energy sector, something U.S. Steel (X) can’t claim.
Please visit Market Realist’s steel page to learn more about the industry.
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United States Steel Corporation
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CODE : X |
ISIN : US9129091081 |
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United States Steel est une société de production minière de fer et de étain basée aux Etats-Unis D'Amerique. United States Steel est cotée aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 6,4 milliards US$ (5,7 milliards €). La valeur de son action a atteint son plus bas niveau récent le 28 mars 2003 à 10,01 US$, et son plus haut niveau récent le 30 novembre 2007 à 98,85 US$. United States Steel possède 176 184 431 actions en circulation. |