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What's in Store for Cleveland-Cliffs (CLF) in Q3 Earnings?
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Cleveland-Cliffs Inc. (CLF - Free Report) is scheduled to release its third-quarter 2017 results before the opening bell on Oct 20.
Cleveland-Cliffs reported net earnings from continuing operations of $77 million or 26 cents per share in the second quarter of 2017 compared with $30 million or 7 cents logged in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of 18 cents.
Sales for the quarter came in at $569.3 million, up 14.7% from $496.2 million in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $483 million.
The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, with an average negative surprise of 42.7%.
Can Cleveland-Cliffs surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up prior to this announcement.
Cliffs Natural Resources Inc. Price and EPS Surprise
Cleveland-Cliffs, in July, cut its profit outlook for 2017. The company now sees net income of roughly $310 million, down from its earlier view of $380 million. It has also cut its adjusted EBITDA guidance to $650 million from $700 million expected earlier.
Cleveland-Cliffs, in June 2017, said that it has selected a location in Toledo, OH, for the development of its first HBI production plant. The company has selected Midrex Technologies for design, engineering and procurement of necessary equipment for the new facility, which will produce 1.6 million tons of HBI per year.
The new production facility is estimated to require roughly $700 million investment. The company expects the construction to begin by early 2018, and production of commercial tonnage of HBI is expected to initiate in the middle of 2020.
The company now expects its full-year selling, general and administrative (SG&A) expenses to be around $110 million, an increase from previous expectations of roughly $100 million to incorporate HBI prefeasibility spending and higher-than-expected incentive compensation accruals.
Revenues from product sales and services for Cleveland-Cliffs’ U.S. Iron Ore segment for the third quarter is projected to witness a 5.5% increase from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at $497 million. The segment’s sales volume increased in the second quarter mainly due to higher demand. The trend is expected to continue in the third quarter.
Moreover, the Zacks Consensus Estimate for revenues from product sales and services for the Asia Pacific Iron Ore segment is expected to be $96 million for the third quarter, reflecting an estimated 2% decline on a sequential-comparison basis. The company has also lowered its sales volume guidance for this segment for 2017 owing to termination of certain shipments caused by unfavorable market conditions.
Cleveland-Cliffs is exposed to headwind from lower expected iron ore pricing for the balance of 2017. Rising global supplies (notably from Brazil and China) are expected to put downward pressure on iron ore prices in second-half 2017. The company has reduced its profit outlook for 2017 factoring in lower expected iron ore prices.
Cleveland-Cliffs’ shares have declined around 3.7% in the last three months, underperforming the industry’s 9% growth.
Earnings Whispers
Our proven model does not conclusively show that Cleveland-Cliffs is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Cleveland-Cliffs for the third quarter is -6.65%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 30 cents and 32 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.34% and carries a Zacks Rank #2.
United States Steel Corporation (X - Free Report) has an Earnings ESP of +5.73% and carries a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in Store for Cleveland-Cliffs (CLF) in Q3 Earnings?
Cleveland-Cliffs Inc. (CLF - Free Report) is scheduled to release its third-quarter 2017 results before the opening bell on Oct 20.
Cleveland-Cliffs reported net earnings from continuing operations of $77 million or 26 cents per share in the second quarter of 2017 compared with $30 million or 7 cents logged in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of 18 cents.
Sales for the quarter came in at $569.3 million, up 14.7% from $496.2 million in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $483 million.
The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, with an average negative surprise of 42.7%.
Can Cleveland-Cliffs surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up prior to this announcement.
Cliffs Natural Resources Inc. Price and EPS Surprise
Cliffs Natural Resources Inc. Price and EPS Surprise | Cliffs Natural Resources Inc. Quote
Factors at Play
Cleveland-Cliffs, in July, cut its profit outlook for 2017. The company now sees net income of roughly $310 million, down from its earlier view of $380 million. It has also cut its adjusted EBITDA guidance to $650 million from $700 million expected earlier.
Cleveland-Cliffs, in June 2017, said that it has selected a location in Toledo, OH, for the development of its first HBI production plant. The company has selected Midrex Technologies for design, engineering and procurement of necessary equipment for the new facility, which will produce 1.6 million tons of HBI per year.
The new production facility is estimated to require roughly $700 million investment. The company expects the construction to begin by early 2018, and production of commercial tonnage of HBI is expected to initiate in the middle of 2020.
The company now expects its full-year selling, general and administrative (SG&A) expenses to be around $110 million, an increase from previous expectations of roughly $100 million to incorporate HBI prefeasibility spending and higher-than-expected incentive compensation accruals.
Revenues from product sales and services for Cleveland-Cliffs’ U.S. Iron Ore segment for the third quarter is projected to witness a 5.5% increase from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at $497 million. The segment’s sales volume increased in the second quarter mainly due to higher demand. The trend is expected to continue in the third quarter.
Moreover, the Zacks Consensus Estimate for revenues from product sales and services for the Asia Pacific Iron Ore segment is expected to be $96 million for the third quarter, reflecting an estimated 2% decline on a sequential-comparison basis. The company has also lowered its sales volume guidance for this segment for 2017 owing to termination of certain shipments caused by unfavorable market conditions.
Cleveland-Cliffs is exposed to headwind from lower expected iron ore pricing for the balance of 2017. Rising global supplies (notably from Brazil and China) are expected to put downward pressure on iron ore prices in second-half 2017. The company has reduced its profit outlook for 2017 factoring in lower expected iron ore prices.
Cleveland-Cliffs’ shares have declined around 3.7% in the last three months, underperforming the industry’s 9% growth.
Earnings Whispers
Our proven model does not conclusively show that Cleveland-Cliffs is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Cleveland-Cliffs for the third quarter is -6.65%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 30 cents and 32 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
FMC Corporation (FMC - Free Report) has an Earnings ESP of +0.88% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.34% and carries a Zacks Rank #2.
United States Steel Corporation (X - Free Report) has an Earnings ESP of +5.73% and carries a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>