It has been about a month since the last earnings report for Cleveland-Cliffs (
CLF Quick Quote CLF - Free Report) . Shares have added about 7.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
Cleveland-Cliffs’ Q3 Earnings and Sales Surpass Estimates
Cleveland-Cliffs’ third-quarter 2023 adjusted earnings were 54 cents per share, up from 29 cents in the prior-year quarter. Earnings per share topped the Zacks Consensus Estimate of 44 cents.
Revenues fell 0.8% to roughly $5.6 billion in the quarter from the year-ago quarter’s levels. The top line beat the Zacks Consensus Estimate of $5.42 billion. Operational Highlights
The company reported Steelmaking revenues of around $5.4 billion in the third quarter, down around 1.2% year over year.
The average net selling price per net ton of steel products was $1,203 in the quarter, down around 11.5% year over year. It was below our estimate of $1,257. External sales volumes for steel products were roughly 4.1 million net tons, up around 13.9% year over year. It lagged our estimate of 4.204 million net tons. The company’s unit cost per ton of steel was down $165 per net ton compared with the year-ago quarter. Financial Position
Cleveland-Cliffs ended the third quarter with cash and cash equivalents of $31 million, down around 44.6% year over year. Long-term debt declined 22.7% year over year to $3.46 billion.
Net cash provided by operating activities was $767 million in third-quarter 2023. Cleveland-Cliffs repurchased 3.9 million shares during the third quarter. It recorded a free cash flow of $605 million for the quarter. Outlook
The company anticipates achieving an additional $15 per net ton reduction in steel unit costs from the third quarter to the fourth, with further cost savings expected in 2024. In the fourth quarter of 2023, it projects that working capital will substantially impact free cash flow.
Cliffs revised its full-year 2023 capital expenditure forecast to $670 million, a decrease from the midpoint of the earlier guidance range of $700 million. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -96.2% due to these changes.
At this time, 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 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.
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.