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AK Steel and TimkenSteel report higher EPS and revenue in 3Q results, but fall short of expectations

In a tale of two Ohio cities, the market greeted results from two steel companies quite differently
Steel furnace
The Ohio-based steel companies reported results late Thursday

AK Steel Holding (NYSE:AKS) and TimkenSteel Corporation (NYSE:TMST) are a pair of Ohio-based steel companies who reported on the surface similar quarterly results, but the market reaction to the numbers were like different forks in a river.

The two reported higher revenue and earnings per share (EPS) for the third quarter due to increased sales, but both their numbers came in below expectations. 

AK Steel said EPS reached $0.21 on net income of $67.2 million, compared with net income of $22.3 million and EPS of $0.07 a year ago. The street expectation was for EPS of $0.23.

Revenues for the quarter reached $1.735 billion, some 16% higher than the $1.5 billion hit last year. The street consensus was for $1.75 billion.

“Our results represented our best third quarter performance in 10 years and reflected strong market conditions and our focus on value-added products,” said Roger Newport, the CEO of AK Steel.  “We expect market conditions to remain positive, which should be reflected in selling prices and support continued strong performance in the fourth quarter and 2019 fiscal year.”

As for Timken Steel, the company reported third quarter EPS of $0.03 on net income of $1.4 million, sharply up from EPS in the same period last year of a loss of $0.13 on a net loss of $5.9 million. The street's expectation was for an EPS of $0.18.

Revenue for the quarter was at $409.9 million, against $339.1 million in the year ago period. The conesnsus was for revenue of $412.58 million.

READ: AK Steel stock tumbles after it reports 2Q earnings miss, in line revenues

The reaction in the market was sharply different.

Shares of AK Steel sank 13.27% in the Friday premarket to $3.66 after closing on Thursday 2.18% higher at $4.22.

Shares of TimkenSteel climbed almost 6% to $11.90 after settling on Thursday 1.17% up at $11.23.

"We continue to build on our position as a leader in special bar quality steel to deliver a richer mix of products, and the third quarter demonstrated good results in that regard," said Tim Timken, the chairman, president and CEO of the company. "We plan to run production aggressively in the fourth quarter in anticipation of a strong start to 2019."

TimkenSteel has a niche by creating tailored steel products and services and leads North America in large alloy steel bars that are up to 16 inches in diameter. They also manufacture seamless mechanical tubing made of its special bar quality (SBQ) steel, as well as supply chain and steel services.

The company is based in Canton, Ohio.

AK Steel is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, including electrical power, and distributors and converters markets and should have benefited from US President Donald Trump's tariffs on the metal.

The company is based in West Chester, Ohio.

Reporting by Rene Pastor, contactable on [email protected]

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