What to Look for in Cliffs Natural Resources’ 4Q16 Results



Upcoming 4Q16 results

Cliffs Natural Resources (CLF) will release its 4Q16 results before the US market opens on February 9, 2017. A conference call with securities analysts and institutional investors will take place at 10:00 AM EST that day to discuss the results. The link to the live broadcast of the conference call can be found on CLF’s investor page.

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In this series, we’ll provide a preview of what to expect from CLF’s earnings and management call. This preview will allow you to compare the company’s actual performance with the expectations.

Why should you watch the results?

Cliffs Natural Resources’ results on February 9 are important. The company will provide guidance for volume and realized price expectations for 2017.

Cliffs mentioned in its 3Q16 results call that based on its initial feedback, the company is comfortable with its preliminary 2017 sales volumes forecast of 19.0 million tons. It would have started receiving nominations for 2017 in the fourth quarter. Any upside based on nominations could be a potential positive for the stock.

There are also many strategically important decisions the company might address in the results release or during the earnings conference call. It could provide details about management’s strategy to further deleverage the company’s balance sheet. Analysts are also anticipating a further update on the company’s venture into a direct reduced iron business.

Most of Cliffs Natural Resources’ revenue is tied up in legacy contracts with US steel players such as United States Steel (X), AK Steel Holding (AKS), and ArcelorMittal (MT). The seaborne iron ore trade has direct implications on CLF’s APIO (Asia Pacific Iron Ore) division and an indirect impact on its USIO (U.S. 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, United States Steel, and AK Steel Holding account for 3.6%, 3.8%, and 4.5%, respectively, of XME’s holdings.

In the next part of this series, we’ll see how Cliffs has performed in 2016 compared to other seaborne iron ore players and US steel peers.


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