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Why TimkenSteel Corp.'s Shares Plunged Today

By Travis Hoium – Feb 1, 2016 at 4:11PM

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Last week's earnings beat expectations, but the stock is giving back gains today.

What: Shares of TimkenSteel Corp. (TMST 3.53%) dropped as much as 29% in trading on Monday before settling to a 21% loss late in trading.

So what: The stock surged 75% on Friday after the company reported earnings that beat expectations. Fourth-quarter revenue fell 49% to $206.6 million and net loss was $25.5 million, or $0.58 per share, but that exceeded expectations by $0.10 and investors were excited that TimkenSteel generated $18 million in free cash flow for the period.  

The reaction today was due to investors taking gains off the table, not because of any change in the company's position.

Now what: TimkenSteel may have beaten Wall Street's guess at earnings, but it's still experiencing a massive decline in business and continued losses and demand from energy and heavy machinery customers shows no signs of turning around. An earnings beat is welcome news on Wall Street, but the fundamentals behind TimkenSteel's business are still terrible and that's going to keep me out of the stock today.  

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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TimkenSteel Corporation Stock Quote
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