Why Cleveland-Cliffs Is Back on Investors’ Radar
Cleveland-Cliffs (CLF) has been drawing fresh attention after recent share price swings, with the stock up 3.8% over the past week but showing negative returns over the month and past 3 months.
See our latest analysis for Cleveland-Cliffs.
The recent 9.31% 7 day share price return contrasts with a 26.26% 3 month share price decline and a 33.53% year to date share price fall. The 1 year total shareholder return of 13.71% suggests shorter term momentum is recovering from a weaker multi year picture.
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With Cleveland-Cliffs trading at US$9.04 against an average analyst price target of US$12.41 and recent returns still mixed, you have to ask: is this a genuine value opportunity, or is the market already pricing in future growth?
Most Popular Narrative: 30.9% Undervalued
The most followed narrative puts Cleveland-Cliffs’ fair value at $13.08 versus a last close of $9.04, framing the recent price weakness as a potential discount.
Strategic footprint optimization, internal coke and feedstock integration, and direct moves to lower fixed costs and SG&A have already resulted in unit cost reductions. Ongoing initiatives are expected to deliver further cost savings, driving enhanced free cash flow, lower leverage, and a structurally higher earnings profile through improved operating margins.
Want to see what is behind that earnings upgrade story? The narrative leans heavily on revenue expansion, margin repair, and a future profit multiple that looks unusually lean. The exact mix of growth, profitability and valuation assumptions is where it gets interesting.
Result: Fair Value of $13.08 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, risks around any easing of U.S. steel tariffs or rising regulatory costs for its blast furnace operations could quickly challenge that 30.9% undervalued narrative.
Find out about the key risks to this Cleveland-Cliffs narrative.
Another Way To Look At Value
The analyst narrative leans on future earnings and a very low future P/E to argue Cleveland-Cliffs looks 30.9% undervalued. Our DCF model, which prices the stock off future cash flows, points the other way, with an estimate of $0.59 per share that sits far below the current $9.04. That kind of gap raises a simple question: which set of assumptions do you trust more?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cleveland-Cliffs for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 64 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Mixed messages on value and risk so far? Check the underlying data yourself, act quickly, and carefully weigh the 2 key rewards and 3 important warning signs
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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