Cleveland-Cliffs Inc. Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next

Investors in Cleveland-Cliffs Inc. (NYSE:CLF) had a good week, as its shares rose 8.9% to close at US$20.05 following the release of its annual results. It looks like a pretty bad result, all things considered. Although revenues of US$22b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 26% to hit US$0.78 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Cleveland-Cliffs

Following the recent earnings report, the consensus from eight analysts covering Cleveland-Cliffs is for revenues of US$21.5b in 2024. This implies a discernible 2.4% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 116% to US$1.70. Before this earnings report, the analysts had been forecasting revenues of US$21.7b and earnings per share (EPS) of US$2.17 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$21.37, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Cleveland-Cliffs, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$14.30 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.4% by the end of 2024. This indicates a significant reduction from annual growth of 45% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cleveland-Cliffs is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cleveland-Cliffs. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$21.37, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Cleveland-Cliffs analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Cleveland-Cliffs has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.