Cliffs Natural Resources (CLF) Gains on Strong Earnings

Cliffs Natural Resources Inc (NYSE: CLF)

Cliffs Natural Resources is having a strong day in the market today, and for good reason. The company released earnings for the most recent quarter, beating expectations. Today, we’ll talk about what we saw from earnings, how the stock reacted to the news, and what we can expect to see from CLF moving forward.

CLF Reports Strong Quarterly Results

Early this morning, Cliffs Natural Resources reported its earnings for the second quarter. The report was overwhelmingly positive, leading to strong gains in the value of the stock. Here’s what we saw:

  • Earnings Per Share – In terms of earnings per share, CLF did overwhelmingly well. During the second quarter, analysts expected that the company would generate earnings in the amount of $0.02 per share. However, the company actually reported earnings in the amount of $0.07 per share, blowing away analyst expectations.
  • Revenue – Revenue was another area where CLF definitely did not disappoint. During the quarter, analysts expected that the company would generate revenue in the amount of $464.8 million. However, the company actually generated revenue in the amount of $496 million.

Following the release of the strong data above, Cliffs Natural Resources CEO, Lourenco Goncalves offered a statement. Here’s a snippet from what he had to say…

During the second quarter we finalized a range of deals that are essential to Cliffs’ future prosperity and growth. Among them, the most significant was the renewal of our multi-year supply agreement with ArcelorMittal…”

How The Stock Reacted To The News

As investors, one of the first things that we learn is that it’s important to keep a close eye on the news. This is especially true when it comes to earnings season. After all, a strong earnings report can lead to big gains while a weak one will lead to losses. In this particular case, CLF produced incredibly strong results for the second quarter. As a result, we’re seeing strong gains in the value of the stock today. Currently (3:10), the stock is trading at $8.16 per share after a gain of $0.32 per share or 4.01% thus far today.

What We Can Expect To See Moving Forward

At the moment, things are looking up in a big way for CLF. First and foremost, the company benefited earlier in the month from the bankruptcy of a competitor. When Essar Steel filed Chapter 11 bankruptcy, Cliffs Natural Resources became more valuable instantly. However, that’s not the only reason to take a bullish stance here. Iron ore is currently on the rise. At the moment, we’re seeing increased demand out of China. Considering the fact that China is the world’s largest consumer of basic materials, this is a great thing for the commodity. With the primary product at CLF being iron ore, it is heavily exposed to spot prices. With all things considered, I’m expecting to see further increases in the iron ore spot price, which should lead to gains for CLF and its shareholders.

What Do You Think?

Where do you think CLF is headed moving forward and why? Join the discussion in the comments below!