A month has gone by since the last earnings report for Cleveland-Cliffs (CLF Quick QuoteCLF - Free Report) . Shares have added about 7.7% 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 catalysts.

Cleveland-Cliffs Misses Q3 Earnings and Revenue Estimates

Cleveland-Cliffs logged profits (attributable to the company’s shareholders) of $165 million or 29 cents per share in third-quarter 2022, down from $1.3 billion or $2.33 per share in the prior-year quarter. Earnings per share missed the Zacks Consensus Estimate of 45 cents. The bottom line in the reported quarter was hurt by higher costs.

Revenues fell roughly 6% year over year to $5,653 million in the quarter. The top line missed the Zacks Consensus Estimate of $5,807.1 million.

Operational Highlights

The company reported Steelmaking revenues of $5,511 million for the third quarter, down around 6% year over year.  Average net selling price per net ton of steel products was $1,360 for the quarter, up around 2% year over year. External sales volumes for steel products were roughly 3.6 million net tons, down around 12% year over year.

Steelmaking unit costs rose on a sequential comparison basis in the third quarter due to the lagged impacts of higher cost inventory produced in prior periods, hurt by higher repair and maintenance expenses, reduced production volume and increased higher costs in natural gas, electricity, scrap, and alloys.

Financial Position

Cleveland-Cliffs ended the third quarter with cash and cash equivalents of $56 million, up around 33% year over year. Long-term debt declined roughly 16% year over year to $4,475 million at the end of the third quarter.

Net cash provided in operating activities was $536 million for the reported quarter. Cleveland-Cliffs also repurchased 2 million shares during the third quarter.

Outlook

The company expects its full-year 2022 average selling price to be around $1,370 per net ton. The projected figure is based on the current 2022 futures curve, which suggests an average hot-rolled coil steel index price of $730 per net ton for the balance of the year. It also incorporates the company's expectation of an improvement in fixed contract prices resetting on Oct 1, 2022 and higher expected slab shipments during the fourth quarter.

The company also expects lower repair and maintenance costs, increased production volume, and lower energy and raw material costs to result in Steelmaking unit operating costs at least $80 per net ton lower in the fourth quarter.

Shipments to Cleveland-Cliffs’ automotive clients improved significantly in the third quarter and the company envisions this positive trend to continue into the fourth quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -137.33% due to these changes.

VGM Scores

Currently, Cleveland-Cliffs has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cleveland-Cliffs has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.