What's in Store for Cleveland-Cliffs (CLF) in Q1 Earnings?

Cleveland-Cliffs Inc. CLF is expected to release first-quarter 2020 results on Apr 23.

The company has a trailing four-quarter positive earnings surprise of 25.1%, on average. Lower iron ore and steel prices are likely to have affected the company’s first-quarter performance.

The stock has tumbled 62.5% in a year’s time compared with the industry’s 19.3% decline.

Let’s see how things are shaping up for the upcoming announcement.

What to Expect in Q1

Cleveland-Cliffs recently announced preliminary results for first-quarter 2020. The company expects revenues for the first quarter to be between $345 million and $375 million. Adjusted EBITDA is projected in the range $15-$25 million.

Further, Mining and Pelletizing sales volume are expected to be around 2.1 million long tons in the first quarter. Flat-rolled steel shipments are expected to be around 200,000 short tons, which only includes sales from Mar 13 to Mar 31. Pre-merger AK Steel flat-rolled steel shipments are projected at roughly 1.1 million short tons (from Jan 1 to Mar 12).

Also, the company recently stated that it is temporarily idling production at two of its iron ore mining operations due to weak market conditions stemming from the coronavirus pandemic. Cleveland-Cliffs has decided to adjust the production of iron ore during the first half of the year. 

Lower iron ore prices due to weak demand amid coronavirus-induced lockdowns are expected to have impacted the company’ first-quarter performance. The lockdowns have affected industrial activities globally, hurting demand for iron ore. Weaker iron ore prices are likely to have affected the company’s first-quarter margins.

Moreover, the impact of weaker U.S. steel prices is likely to get reflected on the company’s results. The coronavirus pandemic has impacted the recovery of the U.S. steel industry and led to a downswing in domestic steel prices due to weak demand across major end-use markets like automotive and construction. As such, lower steel prices are likely to have affected the company’s price realization in the first quarter.

Q1 Sales Estimates

The Zacks Consensus Estimate for first-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $368 million, which calls for a sequential decline of 31.1%.

Cleveland-Cliffs Inc. Price and EPS Surprise

 

Cleveland-Cliffs Inc. Price and EPS Surprise

Cleveland-Cliffs Inc. price-eps-surprise | Cleveland-Cliffs Inc. Quote

 

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Cleveland-Cliffs this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Cleveland-Cliffs is 0.00%. The Most Accurate Estimate and the Zacks Consensus Estimate are both currently pegged at a loss of 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #3.

Stocks Likely to Beat Estimates

Here are some companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Franco-Nevada Corporation FNV, scheduled to release first-quarter 2020 earnings on May 6, has an Earnings ESP of +0.32% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamana Gold Inc. AUY, slated to release first-quarter earnings on Apr 30, has an Earnings ESP of +12.50% and carries a Zacks Rank #3.

Wheaton Precious Metals Corp. WPM, scheduled to release first-quarter results on May 6, has an Earnings ESP of +5.95% and carries a Zacks Rank #3.

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Cleveland-Cliffs Inc. (CLF) : Free Stock Analysis Report
 
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