More Upside ahead for Cleveland-Cliffs after Solid Q3 Results



CLF’s Q3 2018 results

Cleveland-Cliffs (CLF) released its third-quarter earnings before the markets opened on October 19. The company’s management held a conference call with analysts on the same day.

Cleveland-Cliffs reported EPS of $0.64, slightly missing the consensus estimate of $0.67. However, its revenues of $741.8 million beat analysts’ expectations of $732 million. CLF’s third-quarter net profit rose 728.0% to $438.0 million ($1.41 per share). It reported earnings per share of $0.18 in the third quarter of 2017.

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CLF stock declined despite solid results

Cleveland-Cliffs (CLF) stock closed 3.7% lower on October 19 at $11.02. The company’s overall market performance was slightly mixed on the same day, with the S&P 500 Index (SPY) finishing 0.04% lower and the Dow Jones Industrial Average (DIA)(DOW) closing 0.26% higher.

CLF stock was trading down by more than 9.0% at one point at the beginning of the company’s conference call. This dip was unexpected, as the company had positively surprised the markets by initiating regular dividend payments of $0.20 per year. This dividend payment initiation occurred before the market participants expected.

Cleveland-Cliffs’ year-over-year comparables were strong, and it maintained its volumes and realized prices guidance. The start of its new project was on time and on budget. Despite positive results, CLF’s stock price was down. Lourenco Goncalves, the company’s CEO, tore into Wall Street analysts and short sellers on the conference call, which we’ll discuss in the next part of this series.

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YTD outperformance

Despite this loss, Cleveland-Cliffs (CLF) stock has gained an impressive 53% year-to-date. This is a significant event, given how its US peers have given negative stock returns. Compared to CLF’s 53.0% rise, Steel Dynamics (STLD), Nucor (NUE), ArcelorMittal (MT), AK Steel (AKS), and U.S. Steel Corporation (X) have returned -6.0%, -7.1%, -11.0%, -15.0%, and -19.9%, respectively.

Please read Cleveland-Cliffs Stock Nears Its 52-Week High-Looking ahead to 4Q for more on this outperformance and the variables impacting its outlook.

Series overview

In this series, we’ll gauge Cleveland-Cliffs’ (CLF) short-term and long-term fundamentals. We’ll discuss its third-quarter results, its conference call highlights, management guidance, and outlook. We’ll also see how the company is planning to progress on its new growth initiatives.


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