One-glance verdict
Undervalued
$20.63 our estimate vs market $12.06
Wall Street consensus: $12.20 (-40.9% lower than our fair-value estimate)
42% below our estimate, below the bear case
Fundamentals snapshot
Cleveland-Cliffs Inc.
CLF · NYQ · Basic Materials · Steel
Current price
$12.06
52-week range
$7.73 - $16.70
Market cap
$6.88B
Balance sheet
Distressed
-2.45x Concerning
Net debt $7.65B. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 3.1% last year.
- Reward Free cash flow was positive in 6/10 years.
- Risk Net debt grew 70.4% over 3 years.
- Risk Return on equity was -13.9% last year — the company lost money on shareholders' equity.
What this company does
Cleveland-Cliffs Inc.
Cleveland-Cliffs is a steel company that makes the metal used in cars, bridges, and buildings for customers in North America. The company's main strategy is controlling its entire supply chain (the complete journey from raw iron ore in the ground to a finished steel product), which helps it manage costs and avoid shortages.
How the company got here
Founded in 1847 as an iron ore mining company, Cleveland-Cliffs spent over 170 years primarily supplying raw materials to steelmakers. A major turning point came in 2020 when it acquired two major steel producers, AK Steel and ArcelorMittal USA, in quick succession. This transformed the company from just a supplier into the largest producer of flat-rolled steel in North America. This move created a vertically integrated company, meaning it now controls its entire production process from its own mines to the finished steel products.
What it actually does
Cleveland-Cliffs makes the flat steel that becomes everyday products, with a special focus on the automotive industry. Think of the steel used for car bodies, appliances like refrigerators, and materials for bridges and buildings. The company is unique because it owns the entire supply chain (the complete process of making and selling goods), starting with mining iron ore from the ground in Michigan and Minnesota. It then processes that ore and melts it down to create a wide variety of steel sheets, plates, and tubes for other businesses to use.
Steelmaking
This is the company's main business, making up the vast majority of its revenue (the total money earned from sales). It involves mining iron ore and turning it into different types of steel, such as hot-rolled, cold-rolled, and stainless steel. Customers, primarily in the automotive, manufacturing, and construction industries, buy this steel to make their own products. By owning its own iron ore mines, Cleveland-Cliffs can ensure a steady supply of raw materials for its steel mills, which is a significant advantage.
Downstream Products
This smaller part of the company takes the steel it has already made and turns it into more specialized parts. This includes making steel tubing, stamped components for cars, and the tools and dies (molds for shaping metal) needed to create these parts. For example, instead of just selling a roll of steel to a car company, this segment might shape that steel into a specific car part. This allows the company to sell more finished, and often more profitable, products directly to manufacturers.
What management is betting on now
The company's main strategy is to control its entire manufacturing process, from raw materials to finished steel, a concept known as vertical integration. This helps protect it from supply chain (the network to get products from raw material to the customer) disruptions and control costs. Management is heavily focused on supplying the North American automotive market with advanced and specialized steels. They are also investing in making the steelmaking process more environmentally friendly by producing materials like Hot-Briquetted Iron (HBI), which helps reduce emissions.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-235.00M
FY2024 Q4
$-677.00M
FY2025 Q1
$-503.00M
FY2025 Q2
$-67.00M
FY2025 Q3
$-300.00M
FY2025 Q4
$-153.00M
FY2026 Q1
$-477.00M
FY2026 Q2
$73.00M
Revenue
$5.23B
Net income
$-145.00M
Diluted EPS
-0.25
Operating cash flow
$230.00M
Free cash flow
$73.00M
Fetching…
Sources
Revenue
$4.92B
Net income
$-237.00M
Diluted EPS
-0.42
Operating cash flow
$-325.00M
Free cash flow
$-477.00M
Fetching…
Sources
Revenue
$4.31B
Net income
$-243.00M
Diluted EPS
-0.41
Operating cash flow
$-13.00M
Free cash flow
$-153.00M
Fetching…
Sources
Revenue
$4.73B
Net income
$-251.00M
Diluted EPS
-0.51
Operating cash flow
$-143.00M
Free cash flow
$-300.00M
Fetching…
Sources
Revenue
$4.93B
Net income
$-486.00M
Diluted EPS
-0.98
Operating cash flow
$45.00M
Free cash flow
$-67.00M
Fetching…
Sources
Revenue
$4.63B
Net income
$-498.00M
Diluted EPS
-1.01
Operating cash flow
$-351.00M
Free cash flow
$-503.00M
Fetching…
Sources
Revenue
$4.33B
Net income
$-447.00M
Diluted EPS
-0.91
Operating cash flow
$-472.00M
Free cash flow
$-677.00M
Fetching…
Sources
Revenue
$4.57B
Net income
$-242.00M
Diluted EPS
-0.52
Operating cash flow
$-84.00M
Free cash flow
$-235.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $20.63 vs current price $12.06
Wall Street consensus is the average analyst price target: $12.20 (-40.9% lower than our fair-value estimate).
Our most-likely fair value is $20.63 a share — about 71.1% above today's price of $12.06, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $7.7B. Interest coverage -2.4x.
Net debt
$7.65B
Interest coverage
-2.45x
Cleveland-Cliffs Inc. is healthier than 0 of 1 peers on balance-sheet leverage.
Distressed
Worse cushion
Baseline
Better cushion
CLF
BASELINE
Cleveland-Cliffs Inc.
Total debt $7.72B Interest coverage -2.45x This is the baseline the peer rows are being compared against.
What you should know
The case for and against CLF
2 Rewards
3 Risks
Rewards
-
Revenue grew 3.1% last year.
-
Free cash flow was positive in 6/10 years.
Risks
-
Net debt grew 70.4% over 3 years.
-
Return on equity was -13.9% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 8.6% to 0.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
20.21x
P/B
1.23x
P/S
0.36x
EV/EBITDA
28.64x
PEG ratio
0.43x
Profitability
How much profit each dollar creates
Gross margin
-1.1%
Operating margin
0.3%
Net margin
-4.6%
ROE
-13.9%
ROA
-1.7%
Health
Liquidity and balance-sheet strength
Debt / equity
1.33x
Current ratio
1.89x
Quick ratio
0.59x
Total debt
$7.72B
Total cash
$70.00M
Growth
How the business has been compounding
Revenue TTM
$19.20B
Revenue 5Y CAGR
-2.3%
EPS TTM
-1.60
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$-251.00M
Free CF TTM
$-1.02B
FCF margin
-5.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-04-02