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What to Look For in Cliffs Natural Resources’ 1Q16 Results

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Apr. 20 2016, Published 10:11 a.m. ET

Upcoming 1Q16 results

Cliffs Natural Resources (CLF) will release its 1Q16 results before the US market opens on April 28, 2016. A conference call with securities analysts and institutional investors will take place at 10:00 AM EST on April 28 to discuss the results. In this series, we’ll provide a preview of the earnings and management call, so you can compare the company’s actual performance with analysts’ expectations.

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What to look for in the results

Cliffs Natural Resources’ results are important for investors to watch since the company will highlight its relative sensitivity to the seaborne iron ore market through US (DIA) steel imports. It’s worth noting that the US government imposed anti-dumping duties on seven countries in 1Q16. It will be interesting to listen to management’s commentary regarding its impact on Cliffs. Investors should also watch for an update on management’s 2016 offtake expectations.

There are also many strategically important decisions the company might address in the results release and the conference call. The company may provide a further update on its venture into a direct reduced iron business and negotiations regarding the ArcelorMittal (MT) contract, which will come up for renewal at the end of 2016 and the beginning of 2017.

While most of Cliffs Natural Resources’ revenue is tied up in legacy contracts with US steel players like U.S. Steel (X), AK Steel (AKS), and ArcelorMittal, the seaborne iron ore trade has direct implications on its Asia Pacific Iron Ore division and an indirect impact on its US Iron Ore division. The SPDR S&P Metals and Mining ETF (XME) is another way for investors to invest in the metals and mining space. Cliffs Natural Resources, U.S. Steel, and AK Steel account for 3.6%, 3.8%, and 4.5%, respectively, of XME’s holdings.

In the next part of this series, we’ll look at how Cliffs has performed compared to other seaborne iron ore players in the first quarter of 2016.

To read in depth about analysts’ expectations regarding Cliffs’ 1Q16 metrics, please refer to Cliffs Natural Resources Rallies: Why Are Analysts Still Bearish?

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