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Higher Costs Lead to Growing Loss at AK Steel

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A number of headwinds working against AK Steel Holding Corporation (NYSE: AKS  ) resulted in a big drop in earnings during the first quarter. Net sales rose slightly to $1.38 billion but outages and a legal settlement resulted in a net loss of $86.1 million, or $0.63, in the quarter.

Higher costs for everything from energy to iron ore affected margins in the first quarter and a 3% increase in sale prices weren't enough to overcome those costs.

A surprise profit in the fourth quarter gave investors some hope that operations could turn around and AK Steel could make a profit in 2014, but this is a rough start to the year. Unless costs come down significantly, it's questionable whether the company can break even this year or hit analysts' expected $0.07 per share earnings target.

Pricing and costs can be very volatile for AK Steel and until it proves the ability to make a profit long term this isn't a stock I'd be betting on, particularly as input costs are on the rise.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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Related Tickers

8/28/2015 4:00 PM
AKS $2.99 Up +0.07 +2.40%
AK Steel Holding C… CAPS Rating: **