Why AK Steel's Shares Plunged

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 16% today after reporting disappointing earnings outlook.

So what: The company said it would be reporting a loss for the fourth quarter but no one expected an outlook of $0.67-$0.72 per share in losses. The company said that steel prices may fall 5% to drive the loss.

To make matters worse, the company is offering $475 million in debt and 25-million shares of stock in new offerings.

Now what: The bad outlook isn't positive but the company will add almost 25% to its shares outstanding with the share offering. Considering both factors, I think this is a stock I would stay far away from. Operating trends are heading in the wrong direction and I don't see any value in a company that's continually losing money.

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

The article Why AK Steel's Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. 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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.