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Cleveland-Cliffs (CLF) to Report Q2 Earnings: What's in Store?

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Cleveland-Cliffs Inc. (CLF - Free Report) is slated to release second-quarter 2021 results before the opening bell on Jul 22. Benefits of higher steel and iron ore prices and contributions of AK Steel and ArcelorMittal USA acquisitions are likely to get reflected on the company’s performance.

The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 38.3%, on average. The company posted an earnings surprise of around 6.1% in the last reported quarter.

The stock has rallied 240.9% in a year’s time compared with the industry’s 26% rise.

 

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Let’s see how things are shaping up for the upcoming announcement.

Zacks Model

Our proven model predicts an earnings beat for Cleveland-Cliffs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Cleveland-Cliffs is +7.52%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $1.53. 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.

What do the Estimates Say?

Cleveland-Cliffs, last month, raised its guidance for the second quarter. The company now expects second-quarter adjusted EBITDA of $1.3 billion, up from the prior estimate of roughly $1.2 billion.

The Zacks Consensus Estimate for second-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $4,979 million, which calls for a rise of 355.7% year over year.

Some Factors at Play

Cleveland-Cliffs is expected to have benefited from higher steel prices in the quarter to be reported. Steel prices are on an upswing on the back of robust demand and supply shortages. Notably, U.S. steel prices have recovered strongly and hit record levels after plunging to pandemic-induced multi-year lows in August 2020. The benchmark hot-rolled coil prices shot past the $1,600 per short ton level in May 2021 and remained above that level through June. Higher domestic steel prices are likely to have boosted Cleveland-Cliffs’ margins in the second quarter.

Moreover, demand strength in China on higher crude steel production has boosted iron ore prices this year. A recovery in China has spurred up demand for the steel-making commodity. Steel production in China has also gained steam on government infrastructure spending and a rebound in manufacturing activities. Iron ore prices have also gained on increasing concerns over Brazil’s supply. Benefits of higher iron ore prices are likely to get reflected on Cleveland-Cliffs’ second-quarter results.

The company is also likely to have gained from its acquisitions of AK Steel and ArcelorMittal USA, which might have had a positive impact on its June quarter performance. Higher demand in the automotive space is also expected to have supported Cleveland-Cliffs’ shipments in the quarter to be reported.

 

ClevelandCliffs Inc. Price and EPS Surprise

 

ClevelandCliffs Inc. Price and EPS Surprise

ClevelandCliffs Inc. price-eps-surprise | ClevelandCliffs Inc. Quote

 

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Cabot Corporation (CBT - Free Report) , scheduled to release earnings on Aug 9, has an Earnings ESP of +14.81% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien Ltd. (NTR - Free Report) , scheduled to release earnings on Aug 9, has an Earnings ESP of +0.57% and carries a Zacks Rank #1.

Dow Inc. (DOW - Free Report) , scheduled to release earnings on Jul 22, has an Earnings ESP of +4.04% and sports a Zacks Rank #2.


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