Cleveland-Cliffs Q3 preview: Will higher auto demand spur earnings beat?
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Cleveland-Cliffs (NYSE:CLF) is scheduled to announce Q3 results on Tuesday, Oct. 25, before market open.
Consensus EPS estimate is $0.51 and consensus revenue estimate is $5.79B (-3.5% Y/Y).
Over the last 2 years, CLF has beaten EPS estimates 25% of the time and revenue estimates 38% of the time.
Over the last 3 months, EPS estimates have seen 4 downward revisions. Revenue estimates have seen 1 upward revision and 3 downward.
GLJ Research double downgraded Cleveland-Cliffs (CLF) as Q3 earnings estimates are too optimistic. While the Street expects Q3 EBITDA to be ~$1B, the brokerage guided for ~$820M, based on the firm's implied guidance for flattish production volumes and operating expenses, and lower Q/Q average selling prices.
SA contributor Leo Nelissen said despite headwinds, Cleveland-Cliffs (CLF) is holding up better than expected thanks to internal supply chain resilience, fixed-price contracts, low leverage and rebounding auto production.
Q2 recap:
Shares of the steelmaker fell after its Q2 earnings missed estimates, weighed by higher operating costs and supply chain issues. CEO Lourenco Goncalves played down the threat of a recession and higher rates hurting auto demand, saying supply chain problems and COVID-related production outages led to pent-up demand for automobiles.
Recent news:
- Mesabi Trust (MSB) said there will be no distribution this month due to uncertainties caused by Cleveland-Cliffs' (CLF) move to extend idling of operations at Northshore Mining.
- Cleveland-Cliffs' (CLF) new 4-year labor deal with the United Steelworkers was ratified, with base wages expected to rise 20% during the contract period.
- The firm's shares likely gained after better-than-expected Q3 production data from GM and Ford as it has heavy exposure to the automotive market.
- The steelmaker reportedly raised current spot market base prices for all carbon steel hot rolled, cold rolled and coated steel products by a minimum of $75/ton.