Cliffs’s 3Q16 Results to Reflect a Host of Positive Developments



Positive developments

Cliffs Natural Resources (CLF) has several positive developments so far in 2016. The signing of the new long-term contract with ArcelorMittal (MT) was one of the key events that investors were waiting for. Uncertainty regarding the outcome of the contract had been looming over CLF stock for quite some time.

The decision to reopen its United Taconite plant in Northeastern Minnesota two months earlier than expected was another positive. Issuing new equity worth $300 million to reduce its debt burden was the latest in a series of positive developments.

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Cliffs’s outperformance

Contracts, stronger seaborne iron ore prices, and a strong US domestic steel market sentiment have made CLF stock rise 239.0% from the beginning of the year through October 17, 2016. This dwarfs the gains made by other iron ore miners such as BHP Billiton (BHP), Rio Tinto (RIO), and Vale (VALE), as you can see in the above graph.

CLF shares underperformed the S&P 500 (SPY) in August and part of September, mainly due to the recent softness in the seaborne iron ore market and an equity issuance by the company.

What to look for in the results

You should keep an eye on Cliffs Natural Resources’ 3Q16 results, which are due before the market opens on October 27, 2016. The company will highlight its strategy in the face of the bankruptcy filed by Essar Steel Minnesota.

The company may also provide a further update on its venture into a direct reduced iron business.

In this series, we’ll also look at analyst recommendations for Cliffs Natural Resources. It’s important to note that analyst estimates usually lag behind price movements. Still, changes in analyst estimates are key drivers of short-term price movements. You should keep track of changes in analyst estimates because they provide insights into what the markets are expecting from a company.


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