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Cleveland-Cliffs (CLF) Up 25% QTD: What's Behind the Rally?

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Shares of Cleveland-Cliffs Inc. (CLF - Free Report) have rallied around 25% quarter to date. The company has also outperformed its industry’s growth of roughly 5% over the same time frame.  

Cleveland-Cliffs, a Zacks Rank #1 (Strong Buy) stock, has a market cap of roughly $2.6 billion. Average volume of shares traded in the last three months was around 9,692.9K.

Let’s take a look into the factors that are driving this mining company.


Driving Factors

Better-than-expected first-quarter results and upbeat outlook for its U.S. Iron Ore business have provided a boost to Cleveland-Cliffs’ stock. The company delivered a positive earnings surprise of 61.9% in the first quarter. Notably, Cleveland-Cliffs has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 49.9%.

Cleveland-Cliffs, during the first quarter of 2018, witnessed healthy steel demand in several sectors including construction, machinery and equipment, automotive and energy. It also believes that consumption will be very high this year as business environment remains good.

The company also expects prices to continue remaining high. Cleveland-Cliffs expects strength in the U.S. steel market coupled with its enhanced pellet supply contracts to help it deliver significantly higher EBITDA and cash flow in 2018.

Cleveland-Cliffs also raised its sales volume expectations for 2018 for its U.S. iron ore business factoring in strong demand. The company now sees sales volume to be 20.5 million long tons for the full year, up from roughly 20 million long tons expected earlier.

Earnings estimates for Cleveland-Cliffs have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 36.9% to $1.41 per share. The Zacks Consensus Estimate for second-quarter 2018 has also moved up 23.3% over the same timeframe to 53 cents.

The Zacks Consensus Estimate for the second quarter reflects an expected year-over-year growth of 103.9%. Moreover, earnings are expected to register a staggering 182% growth in 2018.

Cleveland-Cliffs Inc. Price and Consensus


Cleveland-Cliffs Inc. Price and Consensus | Cleveland-Cliffs Inc. Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied roughly 73% over a year.

Chemours has an expected long-term earnings growth rate of 15.5%. The company’s shares have gained around 32% in a year.

FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 15.8% in a year.

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