Why AK Steel's Shares Got Crushed


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AK Steel (NYS: AKS) fell 14% today after the company was downgraded by multiple analysts.

So what: AK Steel was hit twice over the weekend, getting a downgrade from Dahlman Rose & Company and from Goldman Sachs. Goldman cited weak steel prices, debt, and the company's pension funding requirements as a reason for the downgrade.

Now what: AK Steel now sits with a sell rating from Goldman and a hold rating from Dahlman. We don't usually take analyst ratings too seriously, but this may be a time to take a step back from this stock. Earnings estimates for 2012 have fallen like a rock recently and the company has more than $3 billion of long-term debt and other liabilities. I don't think this is a good sign for the stock going forward and would wait for stronger fundamental performance before giving my thumbs-up.

Interested in more info on AK Steel? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.Motley Fool newsletter serviceshave recommended buying shares of Goldman Sachs Group. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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Originally published