Cleveland Cliffs Inc (CLF)

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Why Cleveland-Cliffs (CLF) Might be Well Poised for a Surge

Zacks Equity Research

April 14, 2022, 12:20 pm

Cleveland-Cliffs (CLF) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this mining company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Cleveland-Cliffs, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS

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Current-Quarter Estimate Revisions
The company is expected to earn $1.51 per share for the current quarter, which represents a year-over-year change of +331.43%.
Over the last 30 days, one estimate has moved higher for Cleveland-Cliffs while one has gone lower. As a result, the Zacks Consensus Estimate has increased 35.85%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $5.52 per share, representing a year-over-year change of -5.96%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, three estimates have moved up for Cleveland-Cliffs versus no negative revisions. This has pushed the consensus estimate 30.42% higher.

Favorable Zacks Rank
Thanks to promising estimate revisions, Cleveland-Cliffs currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for Cleveland-Cliffs have attracted decent investments and pushed the stock 22.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.

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