Based out of Cleveland, Ohio and operating in the USA and Canada, Cliffs is in the iron and coal mining business. During the last couple of years, declining iron and coal prices have hurt the company's revenues. Its outlook remains positive, however, as iron prices have risen as a result of the recovery of the auto industry.
In the foreseeable future, Cliffs will have to renegotiate contracts and accommodate the pricing formula for operations in the USA. In Canada, the firm is due to complete upgrades at its Bloom Lake asset. In the long run, the North American auto segment and Chinese economic growth will drive iron prices up, increasing revenues and cash flow.
Cliff stands at the industry average financially, displaying operating margin, revenue, and net income increments during the last ten years. In the same period, cash flow has been unstable, and fell into the negative last year. Most worryingly, the company's debt has climbed to an all-time history high during the last two years. This debt originated in part to finance the company's asset upgrades, though some was also used to balance the sheet.
Currently trading at a 47% premium to consensus estimates, the company's stock is highly valued. However, price has dropped very close to the 52-week low. A 9.64% yield and 0.15 dividends make it a bit more attractive. It is recommended to BUY the stock since current tag price is very low, yield is high, and recovering coal and iron prices will make it suitable as a five-year investmen
Yes, momentum is building, across the ore producers, picking up shares tomorrow on the momentum play. I don't want any long term holds in this volatile market, but for a fast trade this valuation level looks to be going higher, and I'll take those short term gains gladly.