Based on last quarter's non GAAP earnings, their annual earnings is in the $4.80 range which is based on average IO price of $120. For every dollar increase in IO, you add 17 cents onto annual earnings. If the current price of IO was to hold stable, thats $3.40 added to their annual earnings! And since people like MS analyst are having trouble with numbers, that's $8.20 per year.
There is no reason why CLF should not be selling for $45 now with IO in the $130 to $140 range.
The average price of iron ore in Q3 is $133 per ton. According to CLF Q2 income statement they have their average iron ore price at $127 a ton, a 6 cent difference which will increase their quarterly earnings by 24 cents. Based on that alone and no impairment charges, Q3 earnings should be in the $1.40 range. The wild cards I am holding back is an increase in iron ore shipments, higher prices for met coal, lower interest cost and a continuation of cost savings programs.
While at the extreme, CLF could reach $8 a year, I think $4.50 to $5.00 is very achievable. Also, look for another $110 million debt payment.