Weakness Seen in Cliffs Natural Resources (CLF) Estimates: Should You Stay Away? - Tale of the Tape


Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Cliffs Natural Resources Inc. ( CLF ), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in CLF.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen the consensus estimate trending lower, going from 31 cents a share a month ago to its current level of 12 cents.

Also, for the current quarter, Cliffs Natural Resources has seen 2 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 8 cents a share from 9 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.6% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don't have a long time horizon to wait.

If you are still interested in the basic materials sector, you may instead consider some better-ranked stocks including Alderon Iron Ore Corp. ( AXX ), Agnico Eagle Mines Limited ( AEM ), with a Zacks Rank #1 (Strong Buy), and Kumba Iron Ore Ltd. ( KIROY ) with a Zacks Rank #2 (Buy). All these stocks may be better selections at this time.

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CLIFFS NATURAL (CLF): Free Stock Analysis Report

ALDERON IRON (AXX): Free Stock Analysis Report

AGNICO EAGLE (AEM): Free Stock Analysis Report


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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: CLF , AXX , AEM , KIROY



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