It has been about a month since the last earnings report for Cleveland-Cliffs (CLF - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cleveland-Cliffs due for a pullback? 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 important drivers.
Cleveland-Cliffs’ Q3 Earnings & Revenue Beat Estimates
Cleveland-Cliffs reported net income of $2.2 million or a loss of 2 cents per share in the third quarter compared with a profit of $91.8 million or 33 cents per share in the prior-year quarter. Third-quarter loss per share includes acquisition costs, severance and inventory step-up amortization.
Barring one-time items, adjusted earnings came in at 4 cents per share that beat Zacks Consensus Estimate of a loss of 18 cents.
Revenues surged 196.3% year over year to $1,646 million and surpassed the Zacks Consensus Estimate of $1,605.8 million.
Operational Highlights
Mining and pelletizing pellet production and sales volume were around 4.6 million long tons and 4.9 million long tons in the quarter, down 11.6% and 14.7% year over year, respectively.
Realized revenues per long ton rose 2.5% year over year to $98.06.
Cash cost of goods sold rate per long ton was up 8% year over year to $68.25.
In the Steel and Manufacturing, volumes in the Flat-rolled steel shipments were 1,117,000 tons. Average net selling price of flat-rolled steel was $1,006 per ton.
Financial Position
As of Sep 30, 2020, Cleveland-Cliffs had cash and cash equivalents of $56 million, down from $399.3 million as of Sep 30, 2019. Long-term debt declined 3.2% sequentially to $4,309.8 million at the end of the quarter.
Net cash used in operating activities was $53.2 million for the nine months ended Sep 30, 2020.
Outlook
Cleveland-Cliffs stated that it expects further sequential improvement in its adjusted EBITDA performance in the fourth quarter based on the current pricing and normalization of operating rates. The improving view also takes into account higher shipments from both Mining & Pelletizing and Steel & Manufacturing segments as well as an expected lowering of idle costs.
For 2020, the company has lowered its capital spending budget to around $500 million. Expenditures related to the completion of the Toledo HBI plant are expected to be $65 million in the fourth quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 20% due to these changes.
VGM Scores
Currently, Cleveland-Cliffs has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Cleveland-Cliffs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
It has been about a month since the last earnings report for Cleveland-Cliffs (CLF - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cleveland-Cliffs due for a pullback? 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 important drivers.
Cleveland-Cliffs’ Q3 Earnings & Revenue Beat Estimates
Cleveland-Cliffs reported net income of $2.2 million or a loss of 2 cents per share in the third quarter compared with a profit of $91.8 million or 33 cents per share in the prior-year quarter. Third-quarter loss per share includes acquisition costs, severance and inventory step-up amortization.
Barring one-time items, adjusted earnings came in at 4 cents per share that beat Zacks Consensus Estimate of a loss of 18 cents.
Revenues surged 196.3% year over year to $1,646 million and surpassed the Zacks Consensus Estimate of $1,605.8 million.
Operational Highlights
Mining and pelletizing pellet production and sales volume were around 4.6 million long tons and 4.9 million long tons in the quarter, down 11.6% and 14.7% year over year, respectively.
Realized revenues per long ton rose 2.5% year over year to $98.06.
Cash cost of goods sold rate per long ton was up 8% year over year to $68.25.
In the Steel and Manufacturing, volumes in the Flat-rolled steel shipments were 1,117,000 tons. Average net selling price of flat-rolled steel was $1,006 per ton.
Financial Position
As of Sep 30, 2020, Cleveland-Cliffs had cash and cash equivalents of $56 million, down from $399.3 million as of Sep 30, 2019. Long-term debt declined 3.2% sequentially to $4,309.8 million at the end of the quarter.
Net cash used in operating activities was $53.2 million for the nine months ended Sep 30, 2020.
Outlook
Cleveland-Cliffs stated that it expects further sequential improvement in its adjusted EBITDA performance in the fourth quarter based on the current pricing and normalization of operating rates. The improving view also takes into account higher shipments from both Mining & Pelletizing and Steel & Manufacturing segments as well as an expected lowering of idle costs.
For 2020, the company has lowered its capital spending budget to around $500 million. Expenditures related to the completion of the Toledo HBI plant are expected to be $65 million in the fourth quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 20% due to these changes.
VGM Scores
Currently, Cleveland-Cliffs has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Cleveland-Cliffs has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on CLF - FREE