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CLEVELAND - Cleveland-Cliffs Inc. (NYSE: NYSE:CLF), a major North American steel producer, expressed support for President Biden's decision to prevent the foreign acquisition of U.S. Steel by Japan's Nippon Steel. The move, seen as a measure to protect national security and domestic manufacturing, was hailed by Cleveland-Cliffs' Chairman, President, and CEO, Lourenco Goncalves.
Goncalves emphasized the importance of American ownership in the steel industry, particularly in supporting union jobs and domestic production. He criticized U.S. Steel's threats to shut down operations and fire union workers as an attempt to pressure the government, praising the administration's quick intervention as a stand against such tactics.
In light of the situation, Cleveland-Cliffs has shown readiness to acquire and invest in union-represented assets potentially affected by U.S. Steel's actions, aiming to preserve jobs and community stability.
Cleveland-Cliffs, headquartered in Cleveland, Ohio, employs around 28,000 people and is known for its value-added steel products, primarily serving the automotive industry. It maintains a vertically integrated operation, spanning from mining to steelmaking and finishing.
The company's statement also references its robust financial backing, with a banking group led by J.P. Morgan and Wells Fargo, to support potential acquisitions.
This announcement is based on a press release statement and reflects the company's position on the matter. Cleveland-Cliffs has not disclosed further details regarding the potential impact on its operations or the steel industry at large.
In other recent news, Cleveland-Cliffs has seen several significant developments. Seaport Global Securities upgraded the company's stock rating from Neutral to Buy, setting a new price target at $16.50, based on a strategic evaluation of the current steel price cycle and anticipated supply-side response. In addition, Cleveland-Cliffs recently announced the appointment of Michael Hrosik as Senior Vice President, Commercial and Michael Cooney as the Enterprise Director, Flat-Rolled Steel Sales.
The company also issued an additional $600 million in senior guaranteed notes to partially fund the acquisition of Stelco Holdings Inc., expected to close in the fourth quarter of 2024. Furthermore, Cleveland-Cliffs has secured a four-year labor contract with United Auto Workers Local 600 for its Dearborn Works operations, impacting approximately 1,000 employees.
Lastly, Cleveland-Cliffs reported a robust Q2 2024 performance, with an adjusted EBITDA of $323 million and a significant net debt reduction of $237 million. The company's focus on high-margin businesses, demonstrated by the upcoming acquisition of Stelco and the allocation of 35% of its free cash flow for share buybacks, is expected to enhance profit margins. These are the recent developments for Cleveland-Cliffs.
InvestingPro Insights
As Cleveland-Cliffs Inc. (NYSE: CLF) stands firm in its commitment to American ownership in the steel industry and expresses readiness to invest in union-represented assets, the company's financial health and market perception become crucial factors for investors to consider. According to real-time data from InvestingPro, Cleveland-Cliffs has a market capitalization of approximately $5.42 billion, which reflects its significant presence in the industry. The company's Price to Earnings (P/E) ratio stands at 131.24, indicating a high earnings multiple, which could suggest that investors have high expectations for future earnings growth. However, when adjusted for the last twelve months as of Q2 2024, the P/E ratio is more moderate at 33.02, offering a different perspective on valuation.
InvestingPro Tips highlight that Cleveland-Cliffs has been aggressively buying back shares, which can be a sign of management's confidence in the company's value. Additionally, the stock is trading near its 52-week low, which may attract investors looking for a potential value play. These insights, coupled with the company's strong free cash flow yield, as implied by its valuation, could be of interest to those considering adding CLF to their portfolio.
It's important to note that analysts have recently revised their earnings downwards for the upcoming period, and the company's stock price has experienced significant volatility, with notable declines over the last week, three months, and six months. While these factors may raise concerns, Cleveland-Cliffs' proactive stance in the current industry environment and its readiness to capitalize on strategic opportunities could balance the scales for some investors.
For a deeper dive into Cleveland-Cliffs' financials and to uncover additional InvestingPro Tips, investors can explore the company's profile on InvestingPro, which includes over a dozen more tips to guide investment decisions.
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