Timken Steel Corporation (NYSE: TMST) and AK Steel Holding Corporation (NYSE:AKS) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitabiliy, risk and institutional ownership.
Insider & Institutional Ownership
75.2% of Timken Steel Corporation shares are owned by institutional investors. Comparatively, 76.7% of AK Steel Holding Corporation shares are owned by institutional investors. 8.1% of Timken Steel Corporation shares are owned by insiders. Comparatively, 1.8% of AK Steel Holding Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Volatility and Risk
” target=”_blank”>Timken Steel Corporation has a beta of 2.24, indicating that its share price is 124% more volatile than the S&P 500. Comparatively, AK Steel Holding Corporation has a beta of 2.88, indicating that its share price is 188% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Timken Steel Corporation andAK Steel Holding Corporation” target=”_blank”> AK Steel Holding Corporation, as provided by MarketBeat.com.
Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Timken Steel Corporation 0 2 1 0 2.33
AK Steel Holding Corporation 1 6 7 0 2.43
Timken Steel Corporation presently has a consensus target price of $19.75, suggesting a potential upside of 29.25%. AK Steel Holding Corporation has a consensus target price of $8.05, suggesting a potential upside of 26.12%. Given Timken Steel Corporation’s higher possible upside, research analysts clearly believe Timken Steel Corporation is more favorable than AK Steel Holding Corporation.
Earnings and Valuation
This table compares Timken Steel Corporation and AK Steel Holding Corporation’s revenue, earnings per share and valuation.
Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Timken Steel Corporation $961.00 million 0.71 -$42.70 million ($2.26) -6.76
AK Steel Holding Corporation $5.90 billion 0.34 $670.60 million $0.26 24.54
AK Steel Holding Corporation has higher revenue and earnings than Timken Steel Corporation. Timken Steel Corporation 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 Timken Steel Corporation and AK Steel Holding Corporation’s net margins, return on equity and return on assets.
Net Margins Return on Equity Return on Assets
Timken Steel Corporation -10.34% -15.69% -9.06%
AK Steel Holding Corporation 1.16% -235.11% 5.15%
Summary
AK Steel Holding Corporation beats Timken Steel Corporation on 9 of the 13 factors compared between the two stocks.
About Timken Steel Corporation
Timken Steel Corporation logoTimkenSteel Corporation manufactures alloy steel, as well as carbon and micro-alloy steel. The Company’s portfolio includes special bar quality (SBQ) bars, seamless mechanical tubing and precision steel components. In addition, the Company supplies machining and thermal treatment services, as well as manage raw material recycling programs, which are used as a feeder system for its melt operations. The Company’s products include SBQ Steel and Seamless Mechanical Steel Tubing, and Value-added Precision Products and Services. Its focus is on alloy steel. The Company manufactures carbon, micro-alloy and alloy steel, sold as ingots, bars and tubes. In addition to its customized steels, the Company also manufactures custom-make precision components. Its products and services are used in a range of demanding applications in the market sectors, such as oil and gas, industrial equipment, mining and power generation.
About AK Steel Holding Corporation
AK Steel Holding Corporation logoAK 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.
