AK Steel (AKS) stock closed the day down 12.9% after reporting earnings Tuesday morning, on a day in which losses at one point approached 15% -- yet it's not entirely clear whether this was because the stock missed earnings, or despite beating earnings.
Analysts had been expecting AK Steel to report a $0.14 per share loss for its fiscal fourth quarter. Calculated according to generally accepted accounting principles (GAAP), AK Steel missed that target badly, losing $0.34 per share (of which only $0.10 were attributable to changes in U.S. tax law). But adjusting for one-time gains and expenses, the company lost "only" $0.06 per share -- an earnings "beat."
Of course, that's not really the point -- beating or missing analyst estimates. The point of a for-profit company is to earn profits, period. By that measure, AK Steel clearly came up short. The steelmaker's $0.34 per share loss for the quarter was half-again as bad as the $0.22 loss AK reported one year ago, and that was despite AK booking 5% more sales ($1.5 billion) in Q4 2017 than it did in Q4 2016.
That was a rough way to end a year in which AK Steel had generally performed better than in 2016. For the full year 2017, AK ended up with $0.03 per share in profit, reversing 2016's $0.03 per share loss. In fact, CEO Roger K. Newport basically admitted as much in his comments on the quarter, noting that AK was "pleased with our full-year results," while the fourth-quarter numbers were only "consistent with our expectation," in light of the "major planned maintenance outages" AK conducted during the quarter.
As for what the year ahead holds for AK Steel, management declined to give earnings guidance in its report. Analysts who follow the stock, however, are optimistic. Current Wall Street estimates call for AK to book $6.3 billion in sales this year (up 12.5% from 2017 sales), and to earn $0.73 per share on those sales -- 24 times more profit than it earned in 2017.
If AK Steel gets anywhere near that mark, then by this time next year, today's losses could fade and become just a distant (bad) memory for AK Steel investors.