What: Shares of Timkensteel Corp (TMST -0.84%) plunged as much as 17% in trading today after management slashed guidance for the third quarter.
So what: After the market closed on Friday, management said third quarter EBITDA would be between a loss of $30 million and $40 million. Shipments are expected to fall 15% sequentially as industrial customers, particularly in oil & gas, cut expenditures for the year.
The update was a shock to investors who were told on July 30 that EBITDA would be between breakeven and a loss of $15 million in the third quarter. Clearly, the steel market has plunged much faster than anyone could have expected.
Now what: There's really nothing positive for investors to take from Timkensteel's update and with China trying to take share and customers cutting demand there isn't a lot of hope for a recovery anytime soon. Even Timkensteel's previous guidance of at best breakeven results were bad enough for me to stay away from this stock. But with markets slowing down faster than expected and losses expected to continue well into 2016 this is a stock, and industry, I would be selling right now.