Friday, June 4, 2010

AK Steel's (NYSE:AKS) Conflicting Outlook

AK Steel's (NYSE:AKS) is a good study in the broader markets, as there are conflicting views about the company based on two ways looking at the company.

There is the company itself, which pundit Jim Cramer has said is a "terrible company," while on the other side there are those looking at the macro-economic picture, which is also conflicted.

The reason for the macro-economic conflict comes from those who believe we're in a recovery and those that don't.

For those analysts who upgraded AK Steel recently, it was based upon their belief we're in the midst of a recovery, and the overall steel industry, including AK would benefit.

On the other side of the macro picture are those who are viewing the economic challenges in Europe and China which they believe will have a detrimental impact on steel demand in the near and probably long-term future.

To me there's no doubt the latter picture from the macro-economic outlook is the right one, as there is no way I can see for someone to say we're in a recovery. It doesn't line up with the data.

So if you take that away, which I believe we must, then you must look at AK Steel, or any other company for that matter, as an entity in and of itself. From that perspective there's a lot they need to do before being considered a top-level steel producer.

1 comment:

eEngineer said...

Like what? I lost 3K since last month with AKS alone. That is not much for most people but I think it's ridiculous how AKS went down more relative to a downgrade to X by Goldman.