Thinking of Investing in CLF? What Our Analysts Know.

Now trading at a price of $21.5, Cleveland-Cliffs has moved -0.6% so far today. In contrast, the S&P 500 index moved -0.6%. Read below for a basic value analysis of Cleveland-Cliffs.

Cleveland-Cliffs shares moved 26.1% over the last 52 weeks, with a high of $34.04 and a low of $11.83. During this time, the stock outperformed the S&P 500 index by 36.0%. As of January 2022, the company's 50-day average price is $17.0. Cleveland-Cliffs Inc. operates as a flat-rolled steel producer in North America. The mid-cap Basic Materials company has 27,000 full time employees and is based in Cleveland, OH. Cleveland-Cliffs has not offered any dividends in the last year.

Snapshot of the Company's Weak Operating Margins and erratic debt levels:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $1,990 $5,354 $20,444
Revenue Growth n/a 169.06% 281.85%
Gross Margins 28.9% 4.7% 22.2%
Gross Margins Growth n/a -83.74% 372.34%
Operating Margins 21.6% -1.0% 19.7%
Operating Margins Growth n/a -104.63% 2070.0%
Earnings Per Share $1.03 -$0.32 $5.36
EPS Growth n/a -131.07% 1775.0%
Free Cash Flow (MM) -$94 -$786 $2,080
FCF Growth n/a -740.64% 364.63%
Capital Expenditures (MM) -$656 -$525 -$705
Net Debt / EBITDA 3.41 16.86 1.01

Cleveland-Cliffs Is Overpriced:

Compared to the Basic Materials sector's average of 8.57, Cleveland-Cliffs has a trailing twelve month P/E ratio of 4.6 and, according to its EPS guidance of 1.8, an expected P/E ratio of 11.9. Cleveland-Cliffs's PEG ratio is 0.01 based on its 526.0% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Cleveland-Cliffs's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 0.35, which still suggests that company's shares are possibly undervalued.

Furthermore, Cleveland-Cliffs is likely undervalued in terms of its equity because its P/B ratio is 1.6 compared to its sector average of 1.86. The company's shares are currently trading -13.5% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 2.02 * 13.6) = $24.86

Cleveland-Cliffs Is the Subject of Mixed Market Indicators:

11 analysts are following Cleveland-Cliffs and have set target prices ranging from $13 to $27 per share. On average, they have given the company a rating of hold. At the current price of $21.5, CLF is trading 7.39% away from its average analyst target price of $20.02 per share, implying an analyst consensus of little upside potential for the stock.

The company has an above average percentage of its shares sold short since 8.4% of the company's shares are tied to short positions. Institutions own 67.5% of Cleveland-Cliffs's shares, while the insider ownership rate stands at 1.41%. The biggest shareholder is Blackrock Inc. with a 10% stake in the company worth approximately $1,163,337,114.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.