Markets

AK Steel will post fourth-quarter earnings January 24

What's Happening

Steel maker AK Steel Holdings ( AKS ) will post its fourth-quarter results before the market opens on January 24. The consensus calls for earnings of $0.07 per share, versus $0.30 during the same period last year. The stock has risen 330% over the last year.

Technical Analysis

AKS was recently trading at $9.65, down $1.74 from its 12-month high and $7.84 above its 12-month low. Overall technical indicators for AKS are bullish with a strong upward trend. The stock has recent support above $9.35 and recent resistance below $10.80. Of the 12 analysts who cover the stock, four rate it a "strong buy", six rate it a "hold", and two rate it a "strong sell". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.

Analyst's Thoughts

AK Steel has soared over the last year, with the stock really gapping higher following the presidential election. President Trump has made a lot of promises over the last year, two of which could have a major impact on steel prices, and as such steel producers such as AK Steel. President Trump promised to significantly boost federal spending on infrastructure, and to move forward with his plan to build a wall on the U.S./Mexican border. As these projects will lead to a sharp increase in steel demand, it is understandable why Wall Street has been so bullish on the stock since Trump's unexpected victory in November. AKS shares were trading at $6.07 the day of the election, and have since risen to $9.65, for a 59% gain in that short period. With sentiment so bullish in the stock right now, it would take a big earnings miss to send shares lower. The company has posted positive earnings surprises six straight quarters, and if it extends that streak with its Q4 numbers, the stock will build on recent gains to likely hit a new 52-week high. If you are a long-term holder of the stock, you may want to take some of your profits off the table just in case the report is weaker than expected, but there is no reason to consider closing out any positions, as the long term outlook remains very bullish for the entire sector.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a March 3/8 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (41.6% annualized*) and the stock would have to fall 14.0% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a March 11/16 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (56.7% annualized*) and the stock would have to rise 18.1% to cause a problem.

Covered Call Trade

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

Originally published on InvestorsObserver.com


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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