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CLF

Cleveland-Cliffs NYSE:CLF Stock Report

Last Price

US$13.47

Market Cap

US$7.0b

7D

1.5%

1Y

-31.5%

Updated

02 Oct, 2022

Data

Company Financials +

Cleveland-Cliffs Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Cleveland-Cliffs
Historical stock prices
Current Share PriceUS$13.47
52 Week HighUS$34.04
52 Week LowUS$12.90
Beta2.21
1 Month Change-19.87%
3 Month Change-14.53%
1 Year Change-31.49%
3 Year Change82.52%
5 Year Change89.72%
Change since IPO263.75%

Recent News & Updates

Sep 28
Does Cleveland-Cliffs (NYSE:CLF) Have A Healthy Balance Sheet?

Does Cleveland-Cliffs (NYSE:CLF) Have A Healthy Balance Sheet?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Sep 16

What It Takes For Cleveland-Cliffs And Nucor To Double

Summary In this article, I address current developments in the steel industry, which show a shift toward demand and pricing fears, according to data and comments from major producers. However, I continue to believe in a long-term bull case as soon as demand comes back, as supply will remain curtailed. Moreover, North American producers benefit from pent-up demand, European deindustrialization, and pressure on Chinese producers. Cleveland-Cliffs and Nucor are my favorite plays in the industry, offering more than 100% upside in the years ahead - CLF even more than NUE. Introduction Cleveland-Cliffs (CLF) and the Nucor Corporation (NUE) are my two favorite steel stocks. The first is in the midst of one of the most impressive turnarounds in America's industrialized history while Nucor is a more stable, dividend-paying steel giant with a bigger footprint in construction-related industries. In a recent article, I discussed why the long-term commodity super cycle was very bullish for (in this case) Cleveland-Cliffs. However, I also mentioned that my entry strategy was based on mid-term economic indicators, which show the risks of a recession. In this article, I will cover both Cleveland-Cliffs and Nucor and explain how to incorporate a very bullish long-term outlook and an extremely uncertain current economic environment. On a side note, it's interesting to mention that CLF and NUE cover almost half of the flat-rolled steel market in the US, which makes company comments and numbers even more important for the bigger picture. Cleveland-Cliffs Now, let's dive into the details! The Honeymoon Is Over - So It Seems Both 2020 and 2021 turned out to be tremendous years for steel stocks. Compared to pre-pandemic levels, Nucor and Cleveland-Cliffs returned roughly 200% and 300%, respectively, beating both the S&P 500 and their steel competitors as the chart below shows. NUE data by YCharts The upswing was fueled by rapidly rising steel demand and supply chain issues that were behind an explosion in steel prices. Midwest Hot Rolled Coil futures soared as high as $2,000 per ton, up from the longer-term median of roughly $600. TradingView (Midwest Hot Rolled Coil) Unfortunately, as the two charts above suggest, the honeymoon is over. Cleveland-Cliffs shares have fallen more than 50% from their peak while the less volatile Nucor has lost a third of its equity market value. What's interesting - and important - is that developments are fast. I just found two interesting headlines on Bloomberg. One indicating signs of recovery (in August), and one showing warning signs as shipments are expected to plummet. That was in September. Bloomberg This week, Nucor came out lowering its 3Q22 estimates. It now sees earnings between $6.30 and $6.40. "The street" was looking for $7.74. According to Bloomberg: Earnings from its steel mills would be "considerably lower" than the second quarter due to shrinking metal margins and declining shipments, the Charlotte, North Carolina-based producer said. As the first headline in the screenshot above suggests, these comments may come as a shock as participants of the steel convention in Atlanta last month were way more positive, despite prices being weak already back then. Some of these comments came from Stelco Holdings CEO Alan Kestenbaum who made the case that energy was strong and that demand is still solid despite weakness in automotive and construction demand. I'm not bringing this up because he was wrong, but because he brought up some good points, that I believe are still valid: Kestenbaum said the car industry is building about 13 million to 14 million automobiles per year, which is a far cry from the lean period during the 2007-2009 economic downturn. Automobiles use about 1 ton of steel per car. "It's not like the Great Recession or Covid where demand just totally disappeared," he said. "At that point the auto industry was consuming just 6 million to 7 million tons a year, and during Covid the factories were shutting down." For example, pent-up demand for automotive production is still high. Because of the pandemic, car manufacturers were unable to turn orders into finished cars. This lowered monthly car production to less than 100 thousand units last year. In 2015, the US economy produced almost 400 thousand units. St. Louis Federal Reserve Cleveland-Cliffs is the nation's largest provider of automotive steel thanks to the acquisitions of AK Steel and ArcelorMittal USA. With regard to pent-up demand, this is what CLF CEO Lourenco Goncalves said in the 2Q22 earnings call: [...] we have all the ingredients for the dynamics of the past two years to shift in our favor. It has been over two years of construction outpacing automotive, but that's no longer the case. The North American automotive industry could have produced 8 million to 10 million more vehicles than they actually did over the past two years. And as a result, relentlessly growing pent-up demand for cars, trucks and SUVs have developed. In a recent article, I wrote that Ford (F) has three years' worth of production as backlog. That's a huge deal as it sustains steel demand despite recession risks. Hence, Kestenbaum isn't wrong. However, what we're seeing now are demand fears. Another major steel producer, United States Steel (X), gave a grim outlook. Note that adding X to CLF and NUE gives us comments from roughly 70% of the entire flat-rolled steel market in the United States. According to the Steel giant from Pittsburgh, Pennsylvania: "Accelerating market headwinds in the third quarter negatively impacted demand across most end-markets, which is expected to result in lower shipment volumes," U.S. Steel said Thursday in its most detailed mid-quarter statement on the business in years. "Supply chain issues in automotive and appliance end-markets continue, while containers and packaging has softened, and service center buyers remain on the sidelines." The timing of these comments makes sense as the latest manufacturing data points to increasing risks of a manufacturing recession. I am using the chart below to track manufacturing sentiment in the United States. I updated it to include September data. What we are seeing is that the third quarter (July - September) is the weakest since the 2020 pandemic. Prior to that, weakness was quite severe in 2015. Author Using Nucor's stock price history, we see that this is dragging down steel stocks. In this case, I went with Nucor's stock price instead of CLF (or both) as CLF is too volatile. However, like NUE, it also follows these leading indicators. Author It's also important to mention that the aforementioned steel companies were pretty much forced to admit that demand weakness is now a thing. After all, analysts have caught up already as earnings estimates for 2022 and beyond have been adjusted quite consistently over the past few weeks - mainly for CLF. The worst thing is that company guidance is often worse than analyst estimates. Hence, the selling on the stock market. MarketScreener (CLF, NUE EPS Estimates) But what about Europe? Europe's Issues Aren't Bullish For The Americans - For Now In my last Cleveland-Cliffs article, I highlighted Europe's de-industrialization issues due to high energy costs. Mr. Goncalves commented on this as well: So we are starting to see a reallocation of microchips and other things from Europe to the United States. And we're also seeing the growth in orders as a consequence of that. So even though I'm not giving you a number Lucas I'm giving you a lot of good indications that things are starting to turn and we are ready for that. Now it's time to include a fourth steel stock. ArcelorMittal is now reporting that it sees crude steel production down 1.5 million tons in the fourth quarter from the year before. That's a 17% year-on-year reduction. At this point, roughly 10% of Europe's steel capacity is offline. And the trend is up going into the last quarter of this year. The problem is that the benefit for US companies will come with a delay. While deindustrialization in Europe benefits the US because it will be home to more European companies, the sudden decline in demand won't boost short-term steel shipments from the US to Europe as Fastmarkets explained in a detailed report. "I would say that while there may be a chance for US exports to Europe, I doubt it will be substantial due to the difference in price between the US and rest of the world," Fastmarkets' US analyst Kim Leppold said. "US steel prices, compared with global competitors like Turkey, South Korea, Asia or Latin America, remain high and less likely to compete for sales." The following chart shows that steel prices have come down everywhere and that US steel prices continue to be more expensive steel in Europe and China. Fastmarkets However, while Chinese steel is cheaper, it's not necessarily getting more attractive. China has a major pollution problem and it is at a point where it will have to deal with the pollution because it is becoming a health hazard - it already is in many regions. Also, the pandemic changed how countries do business with China. We will see increasing supply chain relocations. It won't make Chinese steel expensive, but it's a factor why the US will benefit more than before from halted production in Europe and higher (relative) prices in China. It remains to be seen how big the benefit is, but Europe won't be able to export as much steel to the US anymore. China will be less competitive and US producers benefit from higher exports to Europe and new companies from Europe in North America. Needless to say, that's my longer-term outlook. It won't change the current demand situation. The Perfect Storm & Opportunities With all of this said, I believe we are in a perfect storm for commodities. A second inflation surge after demand weakness hurts the current inflationary wave. In this case, the perfect storm is bullish. Right now, we have a situation consisting of the following issues (but not limited to): High backlog keeping steel companies busier compared to during "normal" recessions. A significant slowdown in production in Europe due to energy prices. China won't be the source of cheap imports it was in the past. European deindustrialization isn't resulting in a full comeback of production capacity when energy prices fall. US producers also suffer from energy prices, yet they are in a position to boost exports to Europe and production for companies moving production to North America. In other words, I expect the current weakness to be followed by a steep surge in commodity prices when demand comes back. I also highlighted these issues in the aluminum market in this article, as high electricity prices have an even bigger impact on aluminum. That said, I went with a pretty bullish article title. And I stand by that as I hate clickbait. What we're dealing with is another period of pain followed by what should be a rally bringing both CLF and NUE - two of my favorite steel companies - to their fair value. In the case of Cleveland-Cliffs, we're dealing with a company that has made the most impressive turnaround among industrials/metals I've ever witnessed. What used to be a low-margin producer of iron ore is now one of America's largest steel producers. In 2020, the company produced zero tons of steel. In 2021, the company produced 15.9 million tons thanks to the aforementioned AK Steel and ArcelorMittal USA acquisitions. The company has a fully-integrated business model sourcing its own raw materials from US operations, which means higher margins and short (low risk!) supply chains. Moreover, the company operates seven blast furnaces and five next-gen electric arc furnaces. This allows the company to go very high up the value chain, meaning automotive and related steel. More than 27% of sales go toward automotive customers. 31% of sales are used by distributors and converters. One major benefit of the "new" Cliffs is its ability to generate high free cash flow used to lower net debt. Last year, the company did more than $2.0 billion in free cash flow. This year, FCF could be $2.7 billion (34% FCF yield!), lowering net debt to less than $3.5 billion. Following the current trajectory of falling steel prices, the company could be net cash positive in 2024 - meaning CLF has more cash than gross debt. TIKR.com That said, CLF is currently trading at 4.5x 2023E of $2.8 billion. That's based on its $12.6 billion enterprise value consisting of its $7.9 billion market cap, $1.6 billion in 2023E net debt, $2.8 billion in pension-related liabilities, and a mere $270 million in minority interest. Even under "normal" circumstances, CLF should be trading at no less than 7x NTM EBITDA. This would imply a market cap of $14.9 billion, roughly 90% above current levels. That's below the company's 2022 all-time high. On a long-term basis, I expect that CLF can rise to $50-$60. Free cash flow generation will erase net debt and all major financial obligations on top of the secular economic tailwinds discussed in this article. FINVIZ Nucor is similar but different. The company is North America's largest recycler of steel scrap, it produces its own direct reduced iron used in its steel mills, it dominates the flat-rolled steel industry with Cleveland-Cliffs, and it has a history of consistent dividend payments, low debt levels, and high free cash flow. NUE is one of the least volatile and most well-managed steel companies in the world, I believe. The company's steel is mainly used in construction and service centers. That's the main difference with Cliffs.

Sep 13
Cleveland-Cliffs Inc.'s (NYSE:CLF) Intrinsic Value Is Potentially 88% Above Its Share Price

Cleveland-Cliffs Inc.'s (NYSE:CLF) Intrinsic Value Is Potentially 88% Above Its Share Price

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Cleveland-Cliffs Inc...

Sep 09

Cleveland-Cliffs reaches second tentative labor deal

Cleveland-Cliffs (NYSE:CLF) has reached a tentative new labor contract with United Steelworkers for its legacy mining and pelletizing operations. The 47-month contract will run from October 1 and cover around 2,000 employees at mining and pelletizing locations in the Michigan Upper Peninsula and Northern Minnesota. Cleveland-Cliffs has now reached two tentative labor contracts covering 14,000 employees - more than half of its total workforce - represented by United Steelworkers. The first contract was announced less than two weeks ago. Both agreements will be finalized after ratification by local union memberships. Shares are up around +4% so far in trading today.

Aug 19

A Commodity Super Cycle Makes Cleveland-Cliffs Ridiculously Cheap

In this article, I start by sharing my view on the commodity supercycle and the implications this has on Cleveland-Cliffs. The company has a short and efficient supply chain, high-quality steel products, and growth markets in automotive and renewables. Even without a super cycle, Cleveland-Cliffs is at least 40% undervalued. I believe that ongoing economic headwinds provide us with good buying opportunities - especially if the Fed pivots early next year. Introduction Early last month, I discussed Cleveland-Cliffs' (CLF) bull case by incorporating the war in Ukraine as well as recession risks. As expected, the stock quickly surged by 20% fueled by a broader upswing in global stocks. In this article, I want to do two things. First, to discuss new developments that make Cleveland-Cliffs an even more attractive investment than I previously thought. This includes rapid input price explosions in competing steel nations like Europe and China where production conditions have turned unfavorable. It also includes what I believe to be a commodity super cycle, which could put a floor under (in this case) steel prices for the foreseeable future, making it possible for CLF to get to the valuation it deserves. Related, I highlight the company's top-tier supply chains and the benefits that come with that. Second, I want to look into recession risks, which could hurt demand. Hence, I expect a bit more weakness before the next move is much higher for CLF shares. So, let's get to it! Commodity Super Cycle Commodities have been the cornerstone of my research for more than 2 years now. Agriculture, metals, energy, you name it. The pandemic has damaged supply chains, and the push for net-zero in 2050 (Paris Climate Agreement) is impacting every carbon-intensive supply chain and increasing demand for certain metals. On top of that, we need to incorporate the "usual" cyclical economic developments and the war in Ukraine, which is making everything even more complicated. With that said, using the "super cycle" as a bull case sometimes feels like a snake oil salesman trick for two reasons: The last super cycle started more than 20 years ago (I was too young to get it back then). It sounds almost too good to be true when someone tells you the stocks you own will remain hot for many years to come. So, let me explain why I'm using that argument. But first, let's look up the definition of "super cycle". According to Schroders: Commodities have achieved strong price gains recently, prompting speculation that we could be in the early stages of a so-called super-cycle; a sustained period of growing demand exceeding supply. While there are many (similar) definitions, it's basically a prolonged uptrend in commodity prices caused by demand outgrowing supply. This includes secular growth through cyclical waves. Some say it can take at least a decade. I'm not so sure about that and frankly not willing to forecast that far. If we get the super cycle even remotely right (2-3 years), we'll be in a good place. In this situation, it's all about energy. Energy is the driving force of every industrial activity since the invention of the steam engine. Affordable energy is key in providing a foundation for successful industrial nations. That has changed in all key nations. Especially in Europe, where I live. Energy prices are rapidly rising. Oil is trading close to $90, Henry Hub Natural Gas is trading close to $9. TradingView (Black = WTI Crude, Orange = Henry Hub) In Europe, natural gas is trading at an equivalent of more than $400 per barrel of oil. This is mainly due to the fact that Russia has massively reduced exports as a tool for economic warfare. However, the roots of these problems are deeper as I have discussed in a number of articles, including the one below. Seeking Alpha Because of political and economic reasons, both energy and metal companies have reduced capital expenditures. This improves their carbon footprint and cash flows (risk management and higher shareholder returns). This year the largest 30 publicly traded fossil fuel and mining companies (a proxy for the entire industry) are expected to invest less than $150 billion in CapEx. That's barely unchanged versus 2021 and nowhere close to the investment levels prior to the commodity crash of 2014/2015. One can imagine what this means in an environment where demand is coming back. WorldScope, MSCI, GMO Now, to return to the aforementioned energy crisis, I don't expect supply to come back meaningfully anytime soon. As Bloomberg reported (in this case via Mining.com) multiple commodity industries are buckling under the energy crisis. One of them is the steel industry: The power cuts in China's Sichuan have affected more than 70% of local steel mills, either through production halts or rationing. That's putting pressure on prices of iron ore, used to make steel. British Steel is among heavy industry firms hiking prices on the back of soaring energy costs. Though that has worked in the past due to the strength of Europe's construction industry, it will be more of a challenge this time as a weaker economy darkens demand prospects. In the US, at least two steel mills have started suspending some operations to cut energy costs. It is headlines like the one below that perfectly encapsulate the devastating trend hitting industrial heavyweights like Germany - the world's 7th-largest steel producer. Bloomberg While energy prices will come down, I do not believe that Europe will experience pre-crisis conditions where it can compete with foreign steel. The same goes for industrial production. Remember, automotive production in Germany peaked in 2017, NOT in 2020 as most believe. TradingEconomics (German Car Production) CLF CEO Lourenco Goncalves hit the nail on the head in his 2Q22 earnings call when he mentioned the de-industrialization of Europe and the impact this has on North America. So we are starting to see a reallocation of microchips and other things from Europe to the United States. And we're also seeing the growth in orders as a consequence of that. So even though I'm not giving you a number Lucas I'm giving you a lot of good indications that things are starting to turn and we are ready for that. European de-industrialization has been the cornerstone of my research for Intelligence Quarterly, where I covered these developments for institutional clients. It's also one of the reasons why I buy North American infrastructure stocks like railroads, trucking, and related. There's more to this super cycle, which I will explain now by incorporating Cleveland-Cliffs a bit more. Cleveland-Cliffs Is In A Terrific Position Cleveland-Cliffs is not immune to high energy prices. With an annual consumption of 200 million MMBtu, CLF is one of America's largest natural gas customers. Higher costs related to inflation and some downtime caused adjusted steelmaking EBITDA to fall from $1.36 billion in 2Q21 to $1.11 billion in 2Q22. After all, the company is now the number one producer of flat-rolled steel products in North America after buying AK Steel in March of 2020 and Arcelor Mittal USA in December of the same year. Based on this context, there are a few factors that benefit CLF as America's go-to spot for high-quality steel products. First of all, its location. As I already highlighted in the first part of this article, energy inflation is an issue in almost every manufacturing nation in the world. However, it's all about relative differences. The US is in a better spot than both Europe and China when it comes to energy security. If we go beyond the ongoing crisis, the US will continue to benefit from its ability to be a huge net exporter of liquified natural gas. Both Europe and China will need it. Don't get me wrong, China is still a low-cost steel producer with the ability to dump cheap steel overseas, but its advantages are eroding. That's what matters here. Second of all, CLF is a well-integrated producer thanks to strategic supply chain acquisitions. The company mines its own pallets, HBI, and provides its own scrap. This allows it to save on costs. After all, companies that do not have in-house iron ore sourcing have to pay more as mining companies need to make a profit. Cleveland-Cliffs In the case of CLF, the company can produce 27 million gross tons of pellets in its 5 mines. These pallets are 85% less CO2 intensive than sinter. On top of that, the company has the capacity to produce 1.9 million metric tons of HBI per year. On top of that, and with regard to its supply chains, the company operates its own "ecosystem" in the Midwest, which also makes supply chains more reliable as it does not come with (for example) iron ore imports from Brazil. Cleveland-Cliffs Moreover, unlike its American competitors, the company does not rely on imported ferrous raw materials. In this case, both Russia and Ukraine exported 4 million tons of pig iron, 3 million tons of steel, and 2 million tons of semi-finished steel to the US. CLF is not impacted by the war. At least not directly. With regard to the aforementioned transition to net-zero, steel is much more important than one might think. While there are many great ways to benefit from higher metal demand related to new energies, steel is key in every single new energy technology. To give you one example, between 66% and 80% of the weight of a wind turbine comes from steel. Cleveland-Cliffs In most environmental reports, steel is excluded as the key focus is mainly on rare metals. However, I think that's wrong - especially when looking at differences between countries. For example, the Chinese steel industry emits 2.5 billion tons of CO2 per year. The US steel industry emits 90 million tons. None of these sentences include a typo. While I am not going to bet any money on China enforcing strict environmental rules, we only need a very small shift in its willingness (or ability) to dump cheap steel overseas to get a much bigger bull case for American steel companies. After all, producing cheap steel for overseas countries has been a large driver of Chinese employment. That will be much harder to achieve when energy prices remain high - or when pollution remains a health hazard in many cities. Moreover, and this is also key, CLF produces high-quality steel that goes up very high in various supply chains. That means higher margins (better products instead of what I like to call "generic steel") and exposure in industries that will require more steel. For example, the company's wide variety of steel products makes it possible to service the renewable technologies that were listed in the screenshot above. Cleveland-Cliffs Basically, is that I believe that CLF will benefit from a prolonged period of strong pricing and steadily rising demand (throughout cycles). On top of that, the company is benefiting from rebounding auto production. Because automotive production was lagging behind construction due to supply chain problems, the company believes that now is its time to shine given that the company has 27% direct automotive exposure. It's also the leading automotive sector steel supplier in general. In 2020 and 2021 automotive production was down to 13 million units per year. While demand was high, production was influenced by severe supply chain disruptions. This caused dealer inventories to fall to levels not witnessed in modern history. It was actually common that supply was below demand at various dealerships. Cleveland-Cliffs What this means is that even if economic growth remains slow, replenishing inventories will come with higher sales for all parties involved in the supply chain. This is what CLF commented on that: All of our automotive customers have indicated to us that their supply chain issues are easing, and we are seeing tangible proof of this trough on our own channel checks. The production pace of the first half of this year has been nowhere near its full potential, let along the prior decade average. Starting in the second half of 2022, we expect to get more automotive volume and with more volume and base load for our mills, our costs should naturally improve. I'm getting a lot of confirmation of this trend. For example, Union Pacific (UNP), the nation's largest stock-listed railroad shipped more than 228 thousand carloads of motor vehicles and equipment. That's 6% higher compared to the prior-year period. Quarter-to-date, shipments are up 25%. So, that's definitely a good sign for the entire industry - even if it is mostly backlog production and not strength based on new orders. This brings me to recession fears. Recession Fears CLF shares have fallen roughly 10% in recent days. Shares are roughly 45% below their 52-week high. There are two options here. Either the bull case is "garbage" or the bull case is for real but investors aren't willing to bet on it yet. Needless to say, I'm going with option 2 because it's backed by data. Despite all the bullish things I've written in this article so far, economic indicators are weakening. The average of the Empire State and Philadelphia Fed manufacturing surveys are now pointing at high risks of a manufacturing recession as my chart below shows.

Shareholder Returns

CLFUS Metals and MiningUS Market
7D1.5%1.8%-2.5%
1Y-31.5%-14.6%-23.2%

Return vs Industry: CLF underperformed the US Metals and Mining industry which returned -14.7% over the past year.

Return vs Market: CLF underperformed the US Market which returned -23.2% over the past year.

Price Volatility

Is CLF's price volatile compared to industry and market?
CLF volatility
CLF Average Weekly Movement8.1%
Metals and Mining Industry Average Movement8.6%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: CLF is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: CLF's weekly volatility (8%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
184727,000C. Goncalveshttps://www.clevelandcliffs.com

Cleveland-Cliffs Inc. operates as a flat-rolled steel producer in North America. The company offers carbon steel products, such as hot-rolled, cold-rolled, electrogalvanized, hot-dip galvanized, hot-dip galvannealed, aluminized, enameling, and advanced high-strength steel products; stainless steel products; plates; and grain oriented and non-oriented electrical steel products. It also provides tubular components, including carbon steel, stainless steel, and electric resistance welded tubing.

Cleveland-Cliffs Fundamentals Summary

How do Cleveland-Cliffs's earnings and revenue compare to its market cap?
CLF fundamental statistics
Market CapUS$6.97b
Earnings (TTM)US$3.46b
Revenue (TTM)US$23.64b

2.0x

P/E Ratio

0.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CLF income statement (TTM)
RevenueUS$23.64b
Cost of RevenueUS$18.36b
Gross ProfitUS$5.28b
Other ExpensesUS$1.82b
EarningsUS$3.46b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)6.69
Gross Margin22.33%
Net Profit Margin14.63%
Debt/Equity Ratio66.7%

How did CLF perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is CLF undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CLF?

Other financial metrics that can be useful for relative valuation.

CLF key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.5x
Enterprise Value/EBITDA2x
PEG Ratio-0.05x

Price to Earnings Ratio vs Peers

How does CLF's PE Ratio compare to its peers?

CLF PE Ratio vs Peers
The above table shows the PE ratio for CLF vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average3.5x
TX Ternium
1.4x-24.4%US$5.4b
SIM Grupo Simec. de
8.6x-25.4%US$4.5b
STLD Steel Dynamics
2.9x-29.1%US$13.0b
X United States Steel
0.9x-64.9%US$4.3b
CLF Cleveland-Cliffs
2x-37.2%US$7.0b

Price-To-Earnings vs Peers: CLF is good value based on its Price-To-Earnings Ratio (2x) compared to the peer average (3.5x).


Price to Earnings Ratio vs Industry

How does CLF's PE Ratio compare vs other companies in the US Metals and Mining Industry?

Price-To-Earnings vs Industry: CLF is good value based on its Price-To-Earnings Ratio (2x) compared to the US Metals and Mining industry average (6.3x)


Price to Earnings Ratio vs Fair Ratio

What is CLF's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CLF PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio2x
Fair PE Ratio5.8x

Price-To-Earnings vs Fair Ratio: CLF is good value based on its Price-To-Earnings Ratio (2x) compared to the estimated Fair Price-To-Earnings Ratio (5.8x).


Share Price vs Fair Value

What is the Fair Price of CLF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CLF ($13.47) is trading below our estimate of fair value ($39.45)

Significantly Below Fair Value: CLF is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Cleveland-Cliffs forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-37.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CLF's earnings are forecast to decline over the next 3 years (-37.2% per year).

Earnings vs Market: CLF's earnings are forecast to decline over the next 3 years (-37.2% per year).

High Growth Earnings: CLF's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CLF's revenue is expected to decline over the next 3 years (-9.4% per year).

High Growth Revenue: CLF's revenue is forecast to decline over the next 3 years (-9.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CLF's Return on Equity is forecast to be low in 3 years time (13.7%).


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Past Performance

How has Cleveland-Cliffs performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


45.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CLF has high quality earnings.

Growing Profit Margin: CLF's current net profit margins (14.6%) are higher than last year (6.1%).


Past Earnings Growth Analysis

Earnings Trend: CLF's earnings have grown significantly by 45.4% per year over the past 5 years.

Accelerating Growth: CLF's earnings growth over the past year (339.5%) exceeds its 5-year average (45.4% per year).

Earnings vs Industry: CLF earnings growth over the past year (339.5%) exceeded the Metals and Mining industry 82.4%.


Return on Equity

High ROE: CLF's Return on Equity (51.4%) is considered outstanding.


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Financial Health

How is Cleveland-Cliffs's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: CLF's short term assets ($8.8B) exceed its short term liabilities ($4.0B).

Long Term Liabilities: CLF's short term assets ($8.8B) do not cover its long term liabilities ($9.1B).


Debt to Equity History and Analysis

Debt Level: CLF's net debt to equity ratio (66.1%) is considered high.

Reducing Debt: CLF had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: CLF's debt is well covered by operating cash flow (86.8%).

Interest Coverage: CLF's interest payments on its debt are well covered by EBIT (16.6x coverage).


Balance Sheet


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Dividend

What is Cleveland-Cliffs's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


0.43%

Forecast Dividend Yield

Dividend Yield vs Market

Cleveland-Cliffs Dividend Yield vs Market
How does Cleveland-Cliffs dividend yield compare to the market?
SegmentDividend Yield
Company (Cleveland-Cliffs)0%
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Metals and Mining)3.6%
Analyst forecast in 3 Years (Cleveland-Cliffs)0.4%

Notable Dividend: Unable to evaluate CLF's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate CLF's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CLF's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CLF's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: CLF is not paying a notable dividend for the US market.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as CLF has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.4yrs

Average management tenure


CEO

C. Goncalves (64 yo)

8.25yrs

Tenure

US$24,494,731

Compensation

Mr. C. Lourenco Goncalves has been the Chairman, Chief Executive Officer and President at Cleveland-Cliffs Inc. since August 7, 2014. Mr. Goncalves has experience in the metals and mining industries, as we...


CEO Compensation Analysis

C. Goncalves's Compensation vs Cleveland-Cliffs Earnings
How has C. Goncalves's remuneration changed compared to Cleveland-Cliffs's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$3b

Mar 31 2022n/an/a

US$4b

Dec 31 2021US$24mUS$2m

US$3b

Sep 30 2021n/an/a

US$2b

Jun 30 2021n/an/a

US$787m

Mar 31 2021n/an/a

-US$33m

Dec 31 2020US$19mUS$2m

-US$123m

Sep 30 2020n/an/a

-US$122m

Jun 30 2020n/an/a

-US$20m

Mar 31 2020n/an/a

US$264m

Dec 31 2019US$16mUS$1m

US$295m

Sep 30 2019n/an/a

US$855m

Jun 30 2019n/an/a

US$963m

Mar 31 2019n/an/a

US$1b

Dec 31 2018US$15mUS$1m

US$1b

Sep 30 2018n/an/a

US$749m

Jun 30 2018n/an/a

US$572m

Mar 31 2018n/an/a

US$428m

Dec 31 2017US$24mUS$1m

US$365m

Sep 30 2017n/an/a

US$130m

Jun 30 2017n/an/a

US$84m

Mar 31 2017n/an/a

US$12m

Dec 31 2016US$10mUS$1m

US$97m

Sep 30 2016n/an/a

US$58m

Jun 30 2016n/an/a

US$110m

Mar 31 2016n/an/a

US$54m

Dec 31 2015US$11mUS$1m

US$104m

Compensation vs Market: C.'s total compensation ($USD24.49M) is above average for companies of similar size in the US market ($USD8.66M).

Compensation vs Earnings: C.'s compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: CLF's management team is considered experienced (3.4 years average tenure).


Board Members

Experienced Board: CLF's board of directors are considered experienced (8.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CLF insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NYSE:CLF Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
12 Sep 22SellUS$5,421Susan GreenIndividual300US$18.07
08 Sep 22BuyUS$24,865Janet MillerIndividual1,425US$17.45
17 Aug 22BuyUS$110,579Celso GoncalvesIndividual6,000US$18.43
16 Aug 22BuyUS$96,800Celso GoncalvesIndividual5,000US$19.36
08 Jun 22SellUS$1,148,427Douglas TaylorIndividual50,000US$23.12
11 May 22BuyUS$102,940Keith KociIndividual4,600US$22.38
29 Apr 22BuyUS$105,260Celso GoncalvesIndividual4,000US$26.32
26 Apr 22BuyUS$122,108Keith KociIndividual4,500US$27.14
16 Feb 22BuyUS$24,949Janet MillerIndividual1,255US$19.88
13 Dec 21BuyUS$99,598Robert FisherIndividual5,000US$19.92
10 Dec 21BuyUS$201,060Ralph MichaelIndividual10,000US$20.11
01 Dec 21BuyUS$988,250C. GoncalvesIndividual50,000US$19.77
30 Nov 21BuyUS$100,629Celso GoncalvesIndividual5,000US$20.13
29 Nov 21BuyUS$105,895Celso GoncalvesIndividual5,000US$21.18
19 Nov 21BuyUS$218,270Keith KociIndividual10,000US$21.83

Ownership Breakdown

What is the ownership structure of CLF?
Owner TypeNumber of SharesOwnership Percentage
State or Government231,4340.04%
Individual Insiders7,407,3541.4%
Public Companies38,186,6717.4%
General Public147,291,08328.5%
Institutions324,181,03962.7%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.5%.


Top Shareholders

Top 25 shareholders own 51.39% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
10.25%
BlackRock, Inc.
53,000,707$713.9m34.84%0.02%
8.77%
The Vanguard Group, Inc.
45,369,745$611.1m1.94%0.01%
7.38%
ArcelorMittal S.A.
38,186,671$514.4m0%no data
4.33%
FMR LLC
22,390,261$301.6m5.09%0.03%
4.06%
State Street Global Advisors, Inc.
21,000,065$282.9m18.61%0.02%
2.1%
Fisher Asset Management, LLC
10,864,657$146.3m-1.8%0.11%
1.32%
Geode Capital Management, LLC
6,807,831$91.7m6.47%0.01%
1.03%
Dimensional Fund Advisors LP
5,320,231$71.7m25.96%0.02%
1.01%
Morgan Stanley, Investment Banking and Brokerage Investments
5,241,494$70.6m6.94%0.01%
0.98%
BNY Mellon Asset Management
5,047,839$68.0m8.92%0.02%
0.89%
D. E. Shaw & Co., L.P.
4,621,190$62.2m-54.68%0.12%
0.87%
Norges Bank Investment Management
4,514,774$60.8m0%0.01%
0.85%
Pacer Advisors, Inc.
4,401,483$59.3m176.4%0.62%
0.83%
Northern Trust Global Investments
4,272,332$57.5m22.18%0.01%
0.82%
C. Goncalves
4,263,156$57.4m0%no data
0.81%
Invesco Ltd.
4,205,852$56.7m-15.56%0.02%
0.77%
Susquehanna International Group, LLP, Asset Management Arm
3,969,643$53.5m80.26%0.13%
0.72%
Neuberger Berman Investment Advisers LLC
3,709,861$50.0m3.34%0.05%
0.6%
First Trust Advisors LP
3,124,405$42.1m3.92%0.05%
0.56%
Charles Schwab Investment Management, Inc.
2,883,226$38.8m2.69%0.01%
0.53%
UBS Asset Management
2,752,246$37.1m14.31%0.01%
0.5%
Miller Value Partners, LLC
2,608,833$35.1m18%1.97%
0.48%
Columbia Management Investment Advisers, LLC
2,503,523$33.7m46.24%0.01%
0.47%
Mirae Asset Global Investments Co., Ltd
2,419,514$32.6m-12.56%0.05%
0.46%
Principal Global Investors, LLC
2,376,362$32.0m-0.89%0.02%

Company Information

Cleveland-Cliffs Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Cleveland-Cliffs Inc.
  • Ticker: CLF
  • Exchange: NYSE
  • Founded: 1847
  • Industry: Steel
  • Sector: Materials
  • Implied Market Cap: US$6.968b
  • Shares outstanding: 517.30m
  • Website: https://www.clevelandcliffs.com

Number of Employees


Location

  • Cleveland-Cliffs Inc.
  • 200 Public Square
  • Suite 3300
  • Cleveland
  • Ohio
  • 44114-2315
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CVADB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1968
CLFNYSE (New York Stock Exchange)YesCommon SharesUSUSDJan 1968
CLF *BMV (Bolsa Mexicana de Valores)YesCommon SharesMXMXNJan 1968
0I0HLSE (London Stock Exchange)YesCommon SharesGBUSDJan 1968

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/02 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.