Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of AK Steel Holding Corporation (AKS) dropped as much as 10% today after the company provided first-quarter guidance that fell well short of expectations.
So what: Management said it expects to ship about 1.73 million tons of product in the first quarter of 2015, down 14% from the fourth quarter of 2014. They also expect to lose $0.23 to $0.28 per share, well below the current Wall Street estimate of a penny-per-share profit.
Now what: An excess of global capacity continues to pressure steel prices, and AK Steel's management even said it thinks "unfairly traded imports" were partly to blame for their weak quarter. No matter the cause, AK Steel has reported losses each of the last three years, and that trend doesn't look to be changing anytime soon. I wouldn't be buying the dip in shares today because I just don't see any catalysts that will either reduce supply or improve demand in the near future. This is just too big a risk to take today, as far as I'm concerned.
