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Cliffs Natural Resources Inc. Message Board

  • whitehorse1800 whitehorse1800 Mar 30, 2012 9:23 AM Flag

    You must be kidding?

    This thing should be in the high 50's with what we know about the USA and what we hear about China. What is justification for current price action? I am neither long nor short and hold no options on this instrument.

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    • Ok here's a take.....

      Op cash flows over past 3 yrs>
      2009 $185.7
      2010 $1.32b
      2011 $2.3b

      Consensus revenue growth:
      2010 $4.7b
      2011 $6.8b
      2012 $7.3b
      2013 $8.2b

      VectorVest analytics based valuation:

      GRT (Earnings Growth Rate): GRT reflects a company's one to three year forecasted earnings growth rate in percent per year. CLF has a forecasted Earnings Growth Rate of 23.00%, which VectorVest considers to be excellent. GRT is computed from historical, current and forecasted earnings data. It is updated each week for every stock in the VectorVest database. GRT often foretells a stock's future price trend. If a stock's GRT trend is upward, the stock's price will likely rise. If GRT is trending downward, the stock's Price will probably fall. VectorVest favors the purchase of stocks whose GRT is rising and is greater than the sum of current inflation and interest rates.

      GPE (Growth to P/E Ratio): GPE is another popular measure of stock valuation. It compares earnings growth rate to P/E ratio. CLF has a GPE rating of 3.80%. High growth stocks are believed to be able to justify high P/E ratios. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00. Unfortunately, this rule of thumb does not take into account the effect of interest rates on P/E ratios. The operative GPE ratio of 1.00 is valid when and only when interest rates equal 10%. With long-term interest rates currently at 3.37%, the operative GPE ratio is 0.113569. Therefore, CLF may be considered to be undervalued .

      Value: Value is a measure of a stock's current worth. CLF has a current Value of $99.71 per share. Therefore, it is undervalued compared to its Price of $70.27 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock's Price and Value always will converge.

      DY (Dividend Yield): DY reflects dividend per share as a percent of Price. CLF has a Dividend Yield of 3.56%. This is above the current average of 1.35% for all the stocks in the VectorVest database. DY equals 100 x (DIV/Price). It is useful to compare DY with EY. If DY is not significantly lower than EY, the dividend payment may be in jeopardy.

      YSG (YSG-Vector): YSG is an indicator which combines DS, DY and DG into a single value, and allows direct comparison of all dividend-paying stocks in the database. CLF has a YSG rating of 1.25, which is very good on a scale of 0.00 to 2.00. Stocks with the highest YSG values have the best combinations of Dividend Yield, Safety and Growth. These are the stocks to buy for above average current income and long-term growth.

      • 3 Replies to marty.chilberg
      • Last one. Just for argument purposes, i pulled up the Thompson Reuters Versus report written yesterday. They have a strong sell on CLF based upon computer driven analytics. They describe their approach as: The Verus Opinion, provided by Verus Analytics Inc, is
        an empirically-derived and historically back-tested stock rating system with buy, sell, and hold opinions.To develop a rating the quantitative system analyzes a firm's earnings quality, balance sheet, and income statement, conducts technical and valuation analysis and evaluates the transactions made by the company's management and directors (i.e. insiders).

        A tidbit from report:
        CLF TTM PE 6.2 NTM PE 7.4
        S&P 500 TTM PE 20.7 FWD PE 16.8
        Company Relative to Its 5-Yr Average TTM PE 69% Discount NTM PE 48% Discount --
        Company Relative to S&P 500 TTM PE 70% Discount FWD PE 56% Discount

        So the rating is based upon the sell off and technical trading pattern primarily. However, buying a company that is projected to grow nicely next year, with a 69% discount to it's historical multiple and a 70% discount to the overall market PE makes sense to me. Buy low/sell high.

      • Another thought...If an investor wants to have some part of a portfolio in materials/steel who is the better play? Here is Fidelity's equity scoring system based on a handful of analytics based opinions:

        Equity Summary Score
        The Equity Summary Score provides a consolidated view of the ratings of 10+ independent research providers on Fidelity.com. It uses the providers' relative, historical, recommendation performance along with other factors to give you an aggregate, accuracy-weighted indication of the independent research firms' stock sentiment.
        range 10 very bullish. 0 very bearish

        AKS .08 very bearish
        NUE .08 very bearish
        CLF 6.2 neutral

        Steel and materials are very out of favor right now with many traders shorting. That led me to want to take a small counter trade as I don't think the China growth is falling off the table. We'll see but with a PE of around 6 and a dividend rate above 3% it looks like a reasonable opportunity. Having said that, I'm writing close to money covered calls to help provide some limited protection.

      • Wow,f'ing brilliant. Actual facts and figures unlike many blowhard posts we see. Thank-you. I am long & strong a few hundred shares in my IRA, you just told me why.

    • Oh, and i forgot to mention.Look at price of Cliffs before the China boom. Thats where it is headed. China the savior of steel is now puking it up.

 
CLF
6.62-0.18(-2.65%)Jan 28 4:05 PMEST

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