A month has gone by since the last earnings report for Cleveland-Cliffs (CLF Quick QuoteCLF - Free Report) . Shares have lost about 5.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cleveland-Cliffs due for a breakout? 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’ Earnings Beat, Sales Down Y/Y in Q4

Cleveland-Cliffs incurred a fourth-quarter 2022 loss of 41 cents per share against the year-ago quarter's earnings of $1.69.

Barring one-time items, the loss per share was 30 cents in the reported quarter, narrower than the Zacks Consensus Estimate of a loss of 33 cents.

The company’s net sales in the fourth quarter were $5,044 million, which decreased 5.6% from $5,346 million reported in the prior-year quarter. Performance in the fourth quarter was aided by the demand recovery in automotive markets. The company was also able to reduce its steelmaking unit costs in the quarter, which helped it to offset the impacts of the lower index pricing environment.

Operational Highlights

Cleveland-Cliffs reported steelmaking revenues of $4,902 million in the fourth quarter, down 5.6% year over year.  Average net selling price per net ton of steel products was $1,156 in the quarter, down 18.8%. External sales volumes for steel products were roughly 3,838 million net tons, up 13.4% year over year.

FY22 Results

Full-year 2022 earnings were $2.55 per share compared with $5.36 a year ago. Revenues climbed roughly 12.4% to a record $23 billion in the full year.

Financials

Cleveland-Cliffs ended the fourth quarter with cash and cash equivalents of $26 million, down around 46% year over year. Long-term debt declined roughly 19% to $4,249 million at the end of the fourth quarter.

Net cash provided in operating activities was $489 million in the reported quarter. Cleveland-Cliffs also repurchased 2 million shares during the fourth quarter.

Outlook

Moving ahead, the company expects improved demand in its end markets, including automotive. The company expects its adjusted EBITDA to improve entering 2023 as its fixed price contracts reset higher, unit costs decline and sales volumes improve. The company renewed its fixed price contracts in December and now sees a year-over-year selling price increase of $115 per ton for its direct automotive business in 2023 from $100 per ton expected earlier.

Factoring in normalized repair and maintenance expense, higher production volume and lower input costs, the company expects its steelmaking cost of goods sold to reduce by roughly $2 billion in 2023. It expects a $50 per ton sequential decline in its steelmaking unit costs in the first quarter of 2023.

The company anticipates its steel shipment volumes to be around 16 million tons for 2023, along with capital expenditure in the range of $700-$750 million for the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -211% due to these changes.

VGM Scores

At this time, Cleveland-Cliffs has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. Notably, Cleveland-Cliffs has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.