AK Steel Gets $1.8M Award from DOE for NOES Development

AK Steel Holding CorporationAKS said that it has received an award of up to $1.8 million from the U.S. Department of Energy ("DOE") under the Advanced Manufacturing Office's Next Generation Electric Machines ("NGEM") program. The company was rewarded for developing next generation advanced, non-oriented electrical steels ("NOES") for motors. These advanced steel will be used in a variety of industrial and automotive applications, including hybrid electric vehicles.

The 3-year project will be conducted in association with the DOE, Oak Ridge National Laboratory's Power Electronics and Electric Machinery Research Center, and Regal Beloit Corporation, a leading producer of electric motors and motion control products.

The project will facilitate the development of an innovative motor design with high-alloy NOES that will result in an efficiency improvement of over 30% when compared to the existing models.

AK Steel's shares have rallied 55.8% over the past one year, outperforming the Zacks categorized Steel-Producers industry's gain of about 42.5%.

AK Steel reported adjusted earnings of 19 cents per share for the first quarter of 2017, which surpassed the Zacks Consensus Estimate of 15 cents. The company recorded net sales of $1,533.4 million for the quarter, up 1% from the year-ago quarter, also beating the Zacks Consensus Estimate of $1,475 million.

For second-quarter 2017, AK Steel expects adjusted EBITDA margin to be slightly higher than the prior-year quarter, but down from the first quarter. The changes reflect a slight reduction in automotive shipments and higher raw material costs and also take into account an expense of $3.4 million related to the redemption of 2020 notes.

The company remains committed to reduce cost amid a persistent challenging operating environment. The company remains on track with its cost cutting initiatives in 2017 through process improvement, headcount cuts, reduction in process time and procurement activities.

AK Steel is also likely to benefit from the strong momentum in the automotive market. The company expects to expand its core automotive business further in 2017.

The buyout of Severstal Dearborn plant has also provided the company an access to highly modernized and upgraded steelmaking equipment and facilities.

However, the company continues to face a challenging macroeconomic environment and weakness in the electrical steel market. It is also exposed to volatility in raw material and steel pricing.

AK Steel Holding Corporation Price and Consensus

AK Steel Holding Corporation Price and Consensus | AK Steel Holding Corporation Quote

AK Steel currently carries a Zacks Rank #3 (Hold).

Stocks to consider

Better-ranked companies in the basic material space include Ternium S.A. TX , ArcelorMittal MT and Kronos Worldwide Inc KRO . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Ternium has an expected long-term growth of 18.4%.

ArcelorMittal has an expected long-term growth of 11.4%.

Kronos has expected long-term growth of 5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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