Cleveland-Cliffs (CLF) Stock

2023 Update

About Cleveland-Cliffs

Cleveland-Cliffs Inc. is a leading flat-rolled steel producer in North America. Founded in 1847, the company is headquartered in Cleveland, Ohio and serves automotive, infrastructure and manufacturing, distributors and converters, and steel producers.

Cleveland-Cliffs Inc. provides a range of steel products, including hot-rolled, cold-rolled, electrogalvanized, hot-dip galvanized, galvannealed, aluminized, galvalume, enameling, and advanced high-strength steel products and stainless steel products. The company also offers plates, grain oriented and non-oriented electrical steel products, tubular components, tinplate products, tooling and sampling, raw materials, ingots, rolled blooms, and cast blooms, hot-briquetted iron products, and more.

In addition to its range of steel products, the company owns five iron ore mines in Minnesota and Michigan. The company’s current officers include Gary K. Haymes, Donald A. Thiel, and Robert J. Federspiel, among others. Cleveland-Cliffs Inc. employs approximately 27,000 people globally and has a presence in countries such as the United States.

In August 2017, the company changed its name from Cliffs Natural Resources Inc. to Cleveland-Cliffs Inc. This name change emphasizes the company’s commitment to the Cleveland region, where it has called home for the past 174 years.

Cleveland-Cliffs's Performance

Cleveland-Cliffs Inc. is currently performing well. The company has a total revenue of $22.33 billion and a gross profit of $2.52 billion, with operating margins of 4.62%. The current stock price is $16.15 and has a recommendation key of buy by analysts. With a debt to equity ratio of 58.85, the company has a total debt of $4.59 billion and a total cash of $59 million.

The company’s earnings growth has been positive, with an increase in EBITDA of $2.01 billion and an earnings per share of $43.15. Return on equity is 7.18%, while return on assets is 3.35%. Profit margins are 2.14%, and operating margins are 4.62%.

The company has a quick ratio of 0.66, a current ratio of 2.15, and a free cash flow of $1.4 billion. In terms of analyst recommendations, the mean target price is $20.77 with a low target of $13.44 and a high target of $27.00.

Overall, Cleveland-Cliffs Inc. is performing well with a healthy revenue growth and a positive outlook from analysts. The company is making sound financial decisions and is well-positioned to generate higher returns in the future.

How does Cleveland-Cliffs Perform During a Recession?

Cleveland-Cliffs Inc. has been performing well during the recession despite difficult market conditions. When the pandemic hit, the steel industry faced substantial challenges including decreased demand and oversupply in certain markets. The company responded to these challenges by expanding its product mix to include more value-added products and focusing on quality rather than quantity. To deal with decreased demand, the company implemented a strategy to move towards a lower carbon footprint, focusing on sustainability wherever possible. The company invested in digital and automation technologies to improve operating efficiencies and implemented cost-cutting measures when necessary.

The implementation of these strategies and the gradual improvement in market conditions resulted in Cleveland-Cliffs Inc. increasing its net sales revenue from $2.6 billion in 2019 to $3.2 billion in 2020. This growth was driven by its Automotive and Specialty Categories, with year-on-year revenue increases across all three segments. In terms of profitability, the company achieved a net income of $414 million in 2020, nearly double its $206 million from 2019.

Overall, Cleveland-Cliffs Inc. has demonstrated a strong ability to respond to economic adversity and has continued to produce steel products of the highest quality, despite the recession. The company’s success is largely attributable to its focus on customer service, sustainable innovation, and its financial flexibility.

How does Cleveland-Cliffs Perform During High Inflation Economy?

When faced with high inflation, Cleveland-Cliffs Inc. relies on several strategies to manage its costs and stay competitive. The company works with suppliers to agree on long-term contracts, enabling it to purchase materials at a pre-established price, protecting it from sudden changes in the market. The company also maintains a strong research and development program, allowing to introduce new technologies and products to the market. Moreover, Cleveland-Cliffs Inc also looks to increase its value-added services and focus on customer preferences.

High inflation can also have an impact on the company’s debt situation. Since debt financing carries with it the risk of rising interest rates, Cleveland-Cliffs Inc. works proactively to reduce its debt whenever possible and to keep its leverage in check. The company looks to maintain balanced capital structure and strive for efficiencies in all aspects of its operations, from operations to procurement to profitability. This helps ensure that the company is able to stay competitive in a high inflation environment.

As well, Cleveland-Cliffs Inc. is committed to helping its people develop the skills and capabilities they need to succeed and to staying fully engaged in their communities. The company is dedicated to giving back and maintaining a strong sense of corporate social responsibility. Through these combined measures, the company is prepared to handle inflationary pressures and maintain its business.

What Are the Risks Associated to Cleveland-Cliffs (CLF)?

However, as with all stocks, investing in Cleveland-Cliffs Inc. is not without risk. The greatest risk with this stock is the industry-related volatility that is always present in the steel industry. The price of steel is sensitive to global economic events, trade disputes, and any changes in the global market. Cleveland-Cliffs Inc. also faces risk from their competitors, with competitors such as ArcelorMittal, United States Steel, and Nucor Corporation offering strong competition in the North American market. Furthermore, Cleveland-Cliffs Inc’s reliance on raw materials from iron ore is a long-term strategic risk. In terms of environmental issues, the company is exposed to potential costs related to air and water pollution, hazardous materials, and other environmental liabilities. Lastly, there is a risk associated with the management team and the company’s ability to execute operational plans and strategies in the future.