Cleveland-Cliffs (CLF) Down 5.6% Since Last Earnings Report: Can It Recover?

It’s been about a month since Cleveland-Cliffs (CLF) last reported earnings. Shares have lost about 5.6% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cleveland-Cliffs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the key drivers.

Cleveland-Cliffs’ earnings and revenue estimates are lagging in the first quarter

Cleveland-Cliffs reported a net loss of $53 million, or 14 cents per share, in the first quarter of 2024, compared with a loss of $42 million, or 11 cents, a year ago.

Adjusted earnings were 18 cents per share versus a loss of 11 cents in the same quarter last year. That number was below the Zacks Consensus Estimate of 19 cents.

Revenue decreased approximately 1.8% from the prior-year level to $5,199 million. The top line missed the Zacks Consensus Estimate of $5,293.6 million.

Operational highlights

The company reported steel revenue of $5,027 million in the first quarter, down about 2% year-over-year.

The average net selling price per net ton of steel products was $1,175 during the quarter, representing an increase of approximately 4.1% year-over-year. This was below our estimate of $1,200. The volume of external sales of steel products amounted to almost 3.94 million net tons, which means a decrease of approximately 3.5% year-on-year. This was below our estimate of 4.08 million net tonnes.

Financial position

Cleveland-Cliffs ended the first quarter with cash and cash equivalents of $30 million, compared to $59 million in the prior-year quarter. Long-term debt decreased 19.6% year-over-year to $3,664 million.

In the first quarter of 2024, net cash from operating activities was $142 million.

Perspectives

The company maintained its guidance for 2024, forecasting steel supplies at 16.5 million net tons. It also anticipates a reduction in unit steel costs of $30 per net tonne, which will translate into an expected benefit in the form of adjusted EBITDA of $500 million compared to 2023. The company estimates capital expenditure at $675-725 million.

How have estimates changed since then?

It turns out that estimate revisions have been on a downward trend over the past month.

As a result of these changes, the consensus estimate moved by -78.79%.

VGM results

Currently, Cleveland-Cliffs has a solid Growth Score of B, although well behind its Momentum Score of F. However, the stock is rated A for value, ranking in the top 20% for this investment strategy.

The story continues

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Cleveland-Cliffs carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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