Critical Survey: AK Steel Holding Corporation (AKS) and Universal Stainless & Alloy Products (NASDAQ:USAP)

Universal Stainless & Alloy Products (NASDAQ: USAP) and AK Steel Holding Corporation (NYSE:AKS) are both small-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Risk & Volatility

Universal Stainless & Alloy Products has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, AK Steel Holding Corporation has a beta of 2.86, meaning that its share price is 186% more volatile than the S&P 500.

Valuation & Earnings

This table compares Universal Stainless & Alloy Products and AK Steel Holding Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal Stainless & Alloy Products $175.29 million 0.75 $17.87 million ($0.29) -62.59
AK Steel Holding Corporation $5.96 billion 0.28 $718.20 million $0.37 14.19

AK Steel Holding Corporation has higher revenue and earnings than Universal Stainless & Alloy Products. Universal Stainless & Alloy Products is trading at a lower price-to-earnings ratio than AK Steel Holding Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Universal Stainless & Alloy Products and AK Steel Holding Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Stainless & Alloy Products -1.20% -0.91% -0.55%
AK Steel Holding Corporation 1.88% 735.25% 6.22%

Institutional and Insider Ownership

84.3% of Universal Stainless & Alloy Products shares are owned by institutional investors. Comparatively, 77.8% of AK Steel Holding Corporation shares are owned by institutional investors. 11.6% of Universal Stainless & Alloy Products shares are owned by company insiders. Comparatively, 1.8% of AK Steel Holding Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Universal Stainless & Alloy Products and AK Steel Holding Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Stainless & Alloy Products 0 0 2 0 3.00
AK Steel Holding Corporation 1 8 6 0 2.33

Universal Stainless & Alloy Products currently has a consensus price target of $19.00, suggesting a potential upside of 4.68%. AK Steel Holding Corporation has a consensus price target of $7.79, suggesting a potential upside of 48.37%. Given AK Steel Holding Corporation’s higher probable upside, analysts plainly believe AK Steel Holding Corporation is more favorable than Universal Stainless & Alloy Products.

Summary

AK Steel Holding Corporation beats Universal Stainless & Alloy Products on 9 of the 13 factors compared between the two stocks.

Universal Stainless & Alloy Products Company Profile

Universal Stainless & Alloy Products, Inc. manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company’s manufacturing process involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels. The Company also performs conversion services on materials supplied by customers. The Company’s manufacturing locations include Bridgeville and Titusville, Pennsylvania; Dunkirk, New York, and North Jackson, Ohio. The Company produce a range of specialty steel grades using several manufacturing processes, including argon oxygen decarburization (AOD), electro-slag remelted (ESR), vacuum induction melting (VIM) and vacuum-arc remelted (VAR). It manufactures its products within the product lines, including Stainless Steel, High-Strength Low Alloy Steel, Tool Steel and High-Temperature Alloy Steel.

AK Steel Holding Corporation Company Profile

AK Steel Holding Corporation is a producer of flat-rolled carbon, stainless and electrical steels, and tubular products through its subsidiary, AK Steel Corporation (AK Steel). The Company also operates blast furnaces and electric arc furnaces. As of December 31, 2016, its operations included eight steelmaking and finishing plants, two coke plants and two tube manufacturing plants across states, including Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia, and a tube manufacturing plant in Mexico. These operations produce flat-rolled carbon, specialty stainless and electrical steels that it sells in sheet and strip form, and carbon and stainless steel that it finishes into welded steel tubing. It also produces metallurgical coal through its subsidiary, AK Coal Resources, Inc. In addition, the Company operates trading companies in Mexico and Europe that buy and sell steel and steel products and other materials.

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