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Cleveland-Cliffs (CLF) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Cleveland-Cliffs (CLF - Free Report) ? Shares have been on the move with the stock up 17.6% over the past month. The stock hit a new 52-week high of $11.66 in the previous session. Cleveland-Cliffs has gained 59.6% since the start of the year compared to the -6.6% move for the Zacks Basic Materials sector and the -5.1% return for the Zacks Mining - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 20, 2018, Cleveland-Cliffs reported EPS of $0.76 versus consensus estimate of $0.56 while it beat the consensus revenue estimate by 13.53%.
For the current fiscal year, Cleveland-Cliffs is expected to post earnings of $2.06 per share on $2.42 billion in revenues. This represents a 248% change in EPS on a 3.69% change in revenues. For the next fiscal year, the company is expected to earn $1.51 per share on $2.19 billion in revenues. This represents a year-over-year change of -13.55% and -9.36%, respectively.
Valuation Metrics
Cleveland-Cliffs may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cleveland-Cliffs has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 5.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.5X versus its peer group's average of 6.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cleveland-Cliffs currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cleveland-Cliffs meets the list of requirements. Thus, it seems as though Cleveland-Cliffs shares could still be poised for more gains ahead.
How Does Cleveland-Cliffs Stack Up to the Competition?
Shares of Cleveland-Cliffs have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Glencore (GLNCY - Free Report) , Materion (MTRN - Free Report) , and Arch Coal (ARCH - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Cleveland-Cliffs. Still, the fundamentals for Cleveland-Cliffs are promising, and it still has potential despite being at a 52-week high.
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Cleveland-Cliffs (CLF) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Cleveland-Cliffs (CLF - Free Report) ? Shares have been on the move with the stock up 17.6% over the past month. The stock hit a new 52-week high of $11.66 in the previous session. Cleveland-Cliffs has gained 59.6% since the start of the year compared to the -6.6% move for the Zacks Basic Materials sector and the -5.1% return for the Zacks Mining - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 20, 2018, Cleveland-Cliffs reported EPS of $0.76 versus consensus estimate of $0.56 while it beat the consensus revenue estimate by 13.53%.
For the current fiscal year, Cleveland-Cliffs is expected to post earnings of $2.06 per share on $2.42 billion in revenues. This represents a 248% change in EPS on a 3.69% change in revenues. For the next fiscal year, the company is expected to earn $1.51 per share on $2.19 billion in revenues. This represents a year-over-year change of -13.55% and -9.36%, respectively.
Valuation Metrics
Cleveland-Cliffs may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cleveland-Cliffs has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 5.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.5X versus its peer group's average of 6.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cleveland-Cliffs currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cleveland-Cliffs meets the list of requirements. Thus, it seems as though Cleveland-Cliffs shares could still be poised for more gains ahead.
How Does Cleveland-Cliffs Stack Up to the Competition?
Shares of Cleveland-Cliffs have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Glencore (GLNCY - Free Report) , Materion (MTRN - Free Report) , and Arch Coal (ARCH - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Cleveland-Cliffs. Still, the fundamentals for Cleveland-Cliffs are promising, and it still has potential despite being at a 52-week high.