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Is a Beat in Store for Cleveland-Cliffs (CLF) in Q1 Earnings?

Nilanjan Gupta

Cleveland-Cliffs Inc. CLF is scheduled to release first-quarter 2019 results on Apr 25, before the opening bell.

The stock has gained 29.1% in a year’s time compared with the industry’s 2.6% rise.

During fourth-quarter 2018 earnings call, Cleveland-Cliffs stated that cash cost for the first quarter was $55 per long ton (as of February 2019). Also, the company mentioned that first quarter is seasonally weak in terms of price and tonnage, due to the annual closure of the Soo Locks limiting shipment on the Great Lakes.

This is likely to limit the company’s deliveries to rail only. Notably, the Zacks Consensus Estimate for first-quarter cash cost per ton is currently pegged at $57, unchanged from the prior-year quarter’s tally.  

The Zacks Consensus Estimate for consolidated revenues is currently pegged at $119 million, suggesting a decrease of around 50.2% year over year. 

The consensus estimate for U.S. Iron Ore sales volumes is currently pegged at 1 million long tons, which implies a decline of 37.9% year over year.

The Zacks Consensus Estimate for realized revenues per ton is currently pegged at $106, which calls for an increase of from $105 in the year-ago quarter. Higher steel pricing and pellet premiums are driving realized revenues.

What the Zacks Model Says

Our proven model shows that Cleveland-Cliffs is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here, as you will see below:

Earnings ESP: Earnings ESP for Cleveland-Cliffs is +5.27%. The Most Accurate Estimate is at a loss of 12 cents and the Zacks Consensus Estimate is pegged at a loss of 13 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #3, which when combined with a positive ESP makes us reasonably confident of earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Cleveland-Cliffs Inc. Price and EPS Surprise

Cleveland-Cliffs Inc. Price and EPS Surprise | Cleveland-Cliffs Inc. Quote


Other Stocks Poised to Beat Estimates

Here are some other companies in the same space you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:

Kinross Gold Corp. KGC has an Earnings ESP of +9.09% and carries a Zacks Rank #3.

Ingevity Corp. NGVT has an Earnings ESP of +6.77% and carries a Zacks Rank #3.

Ternium S.A. TX has an Earnings ESP of +6.21% and carries a Zacks Rank #3.

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Ingevity Corporation (NGVT) : Free Stock Analysis Report
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