AK Steel (NYSE: AKS) and United States Steel (NYSE:X) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.
This table compares AK Steel and United States Steel’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United States Steel||3.16%||12.56%||3.54%|
This is a breakdown of recent recommendations and price targets for AK Steel and United States Steel, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United States Steel||2||8||8||0||2.33|
AK Steel presently has a consensus price target of $6.61, suggesting a potential upside of 45.85%. United States Steel has a consensus price target of $38.56, suggesting a potential upside of 9.58%. Given AK Steel’s higher probable upside, equities research analysts clearly believe AK Steel is more favorable than United States Steel.
Earnings & Valuation
This table compares AK Steel and United States Steel’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|AK Steel||$6.08 billion||0.23||$6.19 million||$0.31||14.61|
|United States Steel||$12.25 billion||0.51||$387.00 million||$1.94||18.14|
United States Steel has higher revenue and earnings than AK Steel. AK Steel is trading at a lower price-to-earnings ratio than United States Steel, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
AK Steel has a beta of 2.74, meaning that its stock price is 174% more volatile than the S&P 500. Comparatively, United States Steel has a beta of 2.79, meaning that its stock price is 179% more volatile than the S&P 500.
United States Steel pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. AK Steel does not pay a dividend. United States Steel pays out 10.3% of its earnings in the form of a dividend.
Insider and Institutional Ownership
67.8% of AK Steel shares are owned by institutional investors. Comparatively, 68.3% of United States Steel shares are owned by institutional investors. 0.8% of AK Steel shares are owned by insiders. Comparatively, 1.0% of United States Steel shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
United States Steel beats AK Steel on 13 of the 16 factors compared between the two stocks.
About AK Steel
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.
About United States Steel
United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.
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