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Cleveland-Cliffs (CLF) Stock Up 24% in 3 Months: Here's Why

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Shares of Cleveland-Cliffs Inc. (CLF - Free Report) have shot up around 24% over the past three months. The company has also significantly outperformed its industry’s growth of roughly 2% over the same time frame.  

Cleveland-Cliffs, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $2.5 billion. Average volume of shares traded in the last three months was around 9,237.3K.

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


What’s Driving CLF?

Forecast-topping first-quarter results and buoyant outlook for its U.S. Iron Ore business have contributed to the rally in 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%.

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 13.4% to $1.52 per share. The Zacks Consensus Estimate for second-quarter 2018 has also moved up 20% over the same timeframe to 54 cents.

The Zacks Consensus Estimate for the second quarter reflects an expected year-over-year growth of 107.7%. Moreover, earnings are expected to register a whopping 204% growth in 2018.

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.

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 FMC Corporation (FMC - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Methanex Corporation (MEOH - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC has an expected long-term earnings growth rate of 14.3%. Its shares have gained roughly 22% over a year.

LyondellBasell has an expected long-term earnings growth rate of 9%. The company’s shares have rallied around 31% in a year.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have shot up roughly 68% over a year.

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