Cliffs Natural Resources: 4Q15 Earnings and Conference Call
Concerns Outweigh Upside for Cliffs Natural Resources after 4Q15
Cliffs’ 4Q15 earnings
Cliffs Natural Resources’ (CLF) results for 4Q15 were a mixed bag. While it missed the consensus expectations on revenues and earnings per share, it beat the consensus expectations of EBITDA. Investors should note that Cliffs has beaten estimates in five out of its last eight earnings releases.
The company released its 4Q15 and full year 2015 results before the US market opened on January 27, 2016. A conference call with securities analysts and institutional investors was held at 10:00 a.m. EST on January 27 to discuss the results.
The company reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $76 million in 4Q15, which was 58% higher than the Bloomberg consensus EBITDA of $48 million. Adjusted EPS (earnings per share), on the other hand, was worse than expected at -$0.39 versus the consensus expectation of -$0.26.
Share price reaction
Cliffs’ stock price closed 1.3% lower after the results, as the management outlook on the markets did not give the investors much to cheer about.
U.S. Steel (X) reported its 4Q15 results on January 26 while Steel Dynamics (STLD) and AK Steel (AKS) announced their results on January 27. While U.S. Steel’s stock was down after the results, Steel Dynamics and AK Steel stock prices were up because of better-than-expected earnings.
Series overview
Investors can use this 4Q15 snapshot series to quickly gauge the company fundamentals as we discuss the company’s results and conference call highlights. The management guidance and outlook can help investors readjust their portfolios. We’ll also analyze how the company’s management is positioning the company to weather the current slowdown in the iron ore markets.
Cliffs has a small direct exposure to the volatile seaborne iron ore market where mining giants such as BHP Billiton (BHP), Rio Tinto (RIO), and Vale SA (VALE) operate.
The rest of the company’s earnings are tied to the legacy contracts in the United States (VTI) with integrated US steel players, including U.S. Steel (X), AK Steel (AKS), and Arcelor Mittal (MT).
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