Cleveland-Cliffs Beats Q2 Estimates: Is Its Stock Set to Fly?

Beats estimates

Cleveland-Cliffs (CLF) released its second-quarter earnings today before the markets opened. It reported EPS of $0.76, beating analysts’ estimate by 43.4%. The company’s revenue came in at $714.3 million, also higher than analysts’ estimate of $642 million.

Cleveland-Cliffs Beats Q2 Estimates: Is Its Stock Set to Fly?

Its US sales volumes rose 38% YoY (year-over-year) to 6.0 million tons, and its realized revenue also rose, by 16% YoY to $112.6 per ton. The company attributed the increases to higher steel pricing and pellet premiums. CLF stock was trading 6.1% higher in pre-market trading at 9:00 AM Eastern Time today.

Revised guidance upwards

Cleveland-Cliffs didn’t just beat estimates—the company also increased its US sales volume guidance for this year, raising its expectations for US iron ore pellet sales volumes from 20.5 million tons to 21.0 million tons, implying 12.5% growth. Investors might recall that the company raised its volume guidance during its Q1 2018 results, from 20.0 million tons to 20.5 million tons. It also previously raised its 2018 realized price guidance to $105–$110 per ton from $97–$102 per ton.

CEO’s remarks

According to a press release, Cleveland-Cliffs CEO Lourenco Goncalves said, “Our second quarter is a definitive statement about the new Cliffs and our earnings power. After almost four years of consistent execution of a well-designed and thoroughly implemented strategy, our company has become a very powerful cash-generating enterprise.” He also mentioned that due to the company’s strong results and typically favorable seasonality, “we expect to generate in 2018 a level of free cash flow that we have not seen in years.”

US (DIA) peer Nucor (NUE) released its results yesterday, which were better than expected, and AK Steel (AKS) is set to release its results on July 30. U.S. Steel Corporation (X) and ArcelorMittal (MT) are expected to release their results on August 1.

For more on Cleveland-Cliffs, read Cleveland-Cliffs’ Outlook for H2 2018 Is Still Bright and Revisiting the Case: How Does Cleveland-Cliffs Look Now?