|Bid||0.00 x 900|
|Ask||4.52 x 47300|
|Day's Range||4.43 - 4.70|
|52 Week Range||4.00 - 6.80|
|Beta (3Y Monthly)||2.62|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 25, 2018|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||5.31|
The US steel industry got a major reprieve after President Donald Trump slapped Section 232 tariffs on US steel imports. AK Steel (AKS) and Cleveland-Cliffs (CLF) praised the tariffs. But even after the tariffs, US steel companies may still be looking to the Trump administration for support.
Cleveland-Cliffs (CLF) released its third-quarter earnings today before the markets opened. Its revenue came in at $741.8 million, which was 24.3% higher YoY (year-over-year), beating analysts’ estimate of $732 million according to the consensus compiled by Thomson Reuters. In its second-quarter results, it beat the consensus estimate.
In March, President Donald Trump imposed a 25% tariff on US steel imports, acting on the United States Department of Commerce’s Section 232 investigation. With the tariffs, the US steel industry’s capacity utilization rate was expected to rise above 80%.
Is the Sell-Off in US Steel Stocks Overdone? As we’ve already seen in this series, there’s been a sell-off in US steel stocks, including Nucor (NUE), U.S. Steel Corporation (X), and AK Steel (AKS). In the previous part, we looked at some of the domestic factors that could be making investors bearish on US steel stocks (XME).
US steel stocks are having a terrible month, which has added to their woes. U.S. Steel Corporation (X) and AK Steel (AKS) have fallen 7.5% and 1.8%, respectively, this month. Nucor (NUE) has shed 6.9% of its market capitalization this month. Let’s look now at the various factors that are driving the recent slump in steel stocks.
US steel stocks, which have been subdued for the last few months, have seen fresh selling pressure this month. Earlier this week, Credit Suisse downgraded US steel stocks from “overweight” to “equal weight.” Several other brokerages have also taken a bearish view of US steel stocks.
Cleveland-Cliffs (CLF) generated FCF of $182 million in 2017, which mostly went toward enhancing its core business, including its acquisition of the remaining minority interest in both the Tilden and Empire mines. According to the consensus compiled by Thomson Reuters, analysts expect Cliffs to generate FCF of $194 million in 2018, which implies growth of 6.5% YoY (year-over-year).
Lightweight aluminum has chipped away at steel’s use in vehicles as fuel efficiency standards have risen. The fuel standards are under attack, a trade war threatens to hike costs, and the auto industry is racing toward a future with electric cars that consumers insist go further and further on a single charge. For automakers, “the biggest bang for their buck is going to be in the power train and battery supply,” Petersen said.
Cleveland-Cliffs (CLF) has come a long way with respect to its debt levels. The company’s change in management in 2014 and its focus on debt reduction have somewhat allayed investors’ concerns. During the Q2 2018 earnings call, Cleveland-Cliffs maintained that bringing its net debt below $1 billion is its second priority, after the focus on the HBI (hot-briquetted iron) plant.
The latest project enables AK Steel (AKS) to explore new low-density steels that can be used in automotive structural applications.
Analysts’ EBITDA estimates reflect their expectations for a company’s future profitability. Analysts usually derive these estimates from revenue projections, margin assumptions, or cost projections.
Wall Street analysts expect Cleveland-Cliffs (CLF) to generate revenue of $731 million in the third quarter, which implies a rise of 4.7% YoY (year-over-year). This expectation is the result of the company’s guidance for higher volumes along with higher spot HRC (hot-rolled coil) prices prevailing in the market compared to last year’s corresponding period. As we discussed earlier in this series, CLF expects higher volumes in the third quarter.
Cleveland-Cliffs (CLF) stock has received six upgrades (including initiations) and just one downgrade in 2018 so far.
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Cleveland-Cliffs (CLF) reported volumes of ~6 million long tons for its US (DIA) iron ore (or USIO) division for Q2 2018. The volumes during the quarter reflect a YoY (year-over-year) increase of 38%. The primary reasons for the increase in volumes were increased customer demand and change in the method of sales recognition.
Cleveland-Cliffs (CLF) is slated to release its third-quarter results before the market opens on October 19. It will have a conference call with analysts and investors on the same day at 10:00 AM EDT. CLF’s second-quarter results were a solid beat on expectations.
The volatile steel sector has yet to obtain the stamp of approval from sell-side firms despite expectations that President Donald Trump's tariffs could lend support. Ahead of the third-quarter reporting ...
On October 15, Credit Suisse downgraded the US steel sector to a “market weight” from an “overweight” rating. Credit Suisse downgraded Nucor (NUE) and Cleveland Cliffs (CLF). Several other brokerages have also taken bearish views on US steel stocks.
Even though tariffs have bumped the prices for domestic steel and aluminum, these four stocks are down more than 15% this year.
AK Steel (AKS) announced today that it has accepted an award of up to $1.2 million from U.S. Department of Energy (DOE) under the Office of Energy Efficiency and Renewable Energy’s (EERE) Advanced Manufacturing Office program to investigate novel low density steels in the laboratory, which could ultimately be used in automotive structural applications. The three-year project will be conducted in collaboration with DOE, Oak Ridge National Laboratory Materials Science and Technology Division, and the Advanced Steel Processing and Products Research Center in the Department of Metallurgical & Materials Engineering at the Colorado School of Mines. The objective of the project is to conduct alloy design, laboratory validation, and testing of low density steels that are alternatives to currently available advanced high strength steels and other lightweight metals. These low density steels are expected to generate energy savings by bringing efficiencies in manufacturing and lifetime savings in automotive structural applications.
U.S. Steel Corporation (X) is scheduled to release its third-quarter earnings results on November 1. The stock has received “buy” or higher ratings from eight analysts, while six analysts have given it “hold” ratings. The remaining two analysts polled by Thomson Reuters on October 9 have given it “sell” or equivalent ratings.
Although the broader market (DIA) is still in the green for the year, metals and mining stocks have sagged this year. Steel stocks like U.S. Steel (X) and AK Steel (AKS) have also been on a losing spree. Metal prices have been subdued this year amid the US-China trade war scare.