Cleveland-Cliffs (CLF) To Post Q4 Earnings: What's In Store?

Cleveland-Cliffs Inc. (NYSE:CLF) is scheduled to release fourth-quarter 2019 results on Feb 20, before the opening bell.

The company has trailing four-quarter positive earnings surprise of 23.1%, on average. Lower iron ore and steel prices are likely to have affected the company’s fourth-quarter performance.

The stock has tumbled 34.5% in a year’s time compared with the industry’s 2.5% decline.

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

What to Expect

In October 2019, the company stated that it expects around 6 million long tons of sales in the fourth quarter.

The company revised its full-year sales volume guidance to 19.5 million long tons, down from previous expectation of 20 million long tons. However, production volume is likely to remain unchanged at 20 million long tons. Cleveland-Cliffs continues to expect mining and pelletizing cash cost of goods sold rate in the band of $62-$67 per long ton.

Moreover, Cleveland-Cliffs expects to realize mining and pelletizing revenue rates in the band of $97-$102 per long ton for 2019.

Some Factors at Play

Iron ore prices peaked to five-year high of $125.77 per ton in July 2019. The uptick was triggered by apprehensions regarding supply disruptions following the fatal disaster at Vale S.A’s Brumadinho dam rupture at Corrego do Feijao mine in Brazil. However, prices tracked downward since then in 2019 amid signs of recovery in Brazilian supply and uncertainties regarding the U.S.-China trade conflict.

Notably, seaborne iron ore prices declined below $80 per ton level in November 2019. Prices were under pressure in December until some recovery later in the month on initial U.S.-China trade deal announcement. As such, lower iron ore prices are expected to have affected the company's performance in the fourth quarter.

Moreover, the impact of lower U.S. steel prices is likely to get reflected on the company’s results. The benchmark hot-rolled coil (HRC) steel prices went downhill through the third quarter of 2019 and continued their slide in the fourth quarter, slumping to a three-year low in October. Weaker U.S. steel prices are expected to have affected the company’s price realization in the quarter to be reported.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $559 million, which suggests a decline of 19.7% year over year.

The Zacks Consensus Estimate for Mining and Pelletizing production volume is currently pegged at 5.3 million long tons, which suggests a rise of 3.4% sequentially.

The consensus mark for Mining and Pelletizing sales volume is currently pegged at 6 million long tons, which calls for a rise of 4.1% sequentially.

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 24 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cleveland-Cliffs Inc. Price and EPS Surprise

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

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:

Eldorado Gold Corporation (NYSE:EGO) , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +23.81% and carries a Zacks Rank #3.

Apache Corporation (NYSE:APA) , slated to release fourth-quarter 2019 earnings on Feb 26, has an Earnings ESP of +27.42% and carries a Zacks Rank #3.

Builders FirstSource, Inc. (NASDAQ:BLDR) , scheduled to release fourth-quarter 2019 earnings on Feb 20, has an Earnings ESP of +1.45% and sports a Zacks Rank #1.

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