On Monday at 1:20 PM ET, shares of Cleveland-Cliffs (CLF), a prominent American steel manufacturer, experienced a surge of 13.7%, following the company’s strong performance in earnings earlier today.
According to analyst predictions, the fourth quarter was expected to be difficult for Cleveland-Cliffs, with an estimated loss of $0.63 per share on sales of approximately $4.9 billion. However, the company managed to meet its revenue goal and exceeded expectations in terms of earnings, reporting a loss of merely $0.50 per share.
Cleveland-Cliffs’ Q2 earnings
Cleveland-Cliffs broke a shipping record in the quarter by delivering 4.3 million net tons of steel, an increase of 7.5% compared to the same period last year. Yet, despite this growth, the average prices for these steels dipped by 10%, causing what would have been a revenue boost to instead result in a decrease, and even led to a negative gross profit margin.
Ultimately, Cleveland-Cliffs reported a net loss of $470 million, which equates to $0.97 per share, marking a change from the modest profit they made during Q2 of 2024.
In summary, Cleveland-Cliffs recorded a net loss of $470 million, equivalent to $0.97 per share, contrasting the slight profit they achieved in Q2 of 2024.
Is Cleveland-Cliffs stock a buy?
In my observation, despite the seemingly negative news about Cleveland-Cliff, investors are purchasing the stock for a couple of reasons. Firstly, management has clarified that approximately 69% of their net loss, amounting to $323 million, stemmed from non-recurring charges linked to idled facilities – these were previously disclosed. Secondly, there’s optimism among investors as the management is confident about its progress in reducing costs and inventories.
Cleveland-Cliffs anticipates a decrease in its 2025 production cost by approximately $50 per ton compared to 2024, which should counteract roughly half of the drop in steel prices experienced in Q2. Additionally, decreases in capital expenditure, operational costs, and administrative expenses, as well as the exclusion of one-time charges from Q2 results, could lead to improved profits. Moreover, potential benefits from Trump administration tariffs on imported steel could further boost earnings. In summary, there’s a strong possibility that profits will recover soon.
Management didn’t quite promise this, mind you. But investors seem to be betting on it.
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2025-07-21 21:09