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Cleveland-Cliffs (CLF) Tops Q2 Earnings and Revenues Estimates
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Cleveland-Cliffs Inc. (CLF - Free Report) reported net earnings (attributable to shareholders) of $165.1 million or 55 cents per share in second-quarter 2018 compared with net earnings of $31.8 million or 10 cents in the prior-year quarter.
Adjusted earnings for the quarter came in at 76 cents per share, which beat the Zacks Consensus Estimate of 56 cents.
Cleveland-Cliffs posted second-quarter consolidated revenues of $714.3 million, up 51.6% year over year. The figure beat the Zacks Consensus Estimate of $629.2 million.
Cleveland-Cliffs Inc. Price, Consensus and EPS Surprise
U.S. Iron Ore pellet sales volume was 6 million long tons in the second quarter, up roughly 38% year over year. The upside was mainly driven by increased customer demand and adaptation of the new revenue recognition accounting standard.
Realized revenues per ton improved 16% year over year to $112.60, mainly driven by increased steel pricing and pellet premiums.
Cash cost of goods sold and operating expense per long ton increased to $62.32 compared with $59.30 per long ton in the year-ago quarter. The increase was driven by higher costs related to energy rates, product mix, employee-related expenses, repairs and royalties.
Financial Position
Cleveland-Cliffs had $802.5 million of cash and cash equivalents as of Jun 30, 2018 compared with $321.5 million as of Jun 30, 2017.
Long-term debt was $2,297 million as of Jun 30, 2018 compared with $1,611.8 million as of Jun 30, 2017.
Outlook
For 2018, Cleveland-Cliffs has increased U.S. Iron Ore volume expectation to 21 million long tons. Production volume expectation remains unchanged at 20 million tons.
The company maintained that it anticipates full-year selling, general and administrative (SG&A) expenses to be around $115 million, of which roughly $20 million is non-cash.
Cleveland-Cliffs lowered capital expenditure expectation for the Toledo HBI Project for this year to $200 million due to further development and refined timing of the project spending plan. The company has reduced sustaining capital expectation by $10 million to $75 million for 2018 while Northshore Mine upgrade spending expectation is unchanged at $50 million.
Price Performance
Cleveland-Cliffs’ shares have gained 14.5% in the last three months against the industry’s 2.2% decline.
Zacks Rank & Other Stocks to Consider
Cleveland-Cliffs currently sports a Zacks Rank #1 (Strong Buy).
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 48.4% in a year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 53.1% in a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have gained 24.9% in a year.
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Cleveland-Cliffs (CLF) Tops Q2 Earnings and Revenues Estimates
Cleveland-Cliffs Inc. (CLF - Free Report) reported net earnings (attributable to shareholders) of $165.1 million or 55 cents per share in second-quarter 2018 compared with net earnings of $31.8 million or 10 cents in the prior-year quarter.
Adjusted earnings for the quarter came in at 76 cents per share, which beat the Zacks Consensus Estimate of 56 cents.
Cleveland-Cliffs posted second-quarter consolidated revenues of $714.3 million, up 51.6% year over year. The figure beat the Zacks Consensus Estimate of $629.2 million.
Cleveland-Cliffs Inc. Price, Consensus and EPS Surprise
Cleveland-Cliffs Inc. Price, Consensus and EPS Surprise | Cleveland-Cliffs Inc. Quote
U.S. Iron Ore Results
U.S. Iron Ore pellet sales volume was 6 million long tons in the second quarter, up roughly 38% year over year. The upside was mainly driven by increased customer demand and adaptation of the new revenue recognition accounting standard.
Realized revenues per ton improved 16% year over year to $112.60, mainly driven by increased steel pricing and pellet premiums.
Cash cost of goods sold and operating expense per long ton increased to $62.32 compared with $59.30 per long ton in the year-ago quarter. The increase was driven by higher costs related to energy rates, product mix, employee-related expenses, repairs and royalties.
Financial Position
Cleveland-Cliffs had $802.5 million of cash and cash equivalents as of Jun 30, 2018 compared with $321.5 million as of Jun 30, 2017.
Long-term debt was $2,297 million as of Jun 30, 2018 compared with $1,611.8 million as of Jun 30, 2017.
Outlook
For 2018, Cleveland-Cliffs has increased U.S. Iron Ore volume expectation to 21 million long tons. Production volume expectation remains unchanged at 20 million tons.
The company maintained that it anticipates full-year selling, general and administrative (SG&A) expenses to be around $115 million, of which roughly $20 million is non-cash.
Cleveland-Cliffs lowered capital expenditure expectation for the Toledo HBI Project for this year to $200 million due to further development and refined timing of the project spending plan. The company has reduced sustaining capital expectation by $10 million to $75 million for 2018 while Northshore Mine upgrade spending expectation is unchanged at $50 million.
Price Performance
Cleveland-Cliffs’ shares have gained 14.5% in the last three months against the industry’s 2.2% decline.
Zacks Rank & Other Stocks to Consider
Cleveland-Cliffs currently sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the basic materials space are KMG Chemicals, Inc. , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 48.4% in a year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 53.1% in a year.
BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have gained 24.9% in a year.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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