On Jul 15, Zacks Investment Research downgraded mining company
Cliffs Natural Resources Inc.
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Cliffs, in Apr 24, posted a net loss of $83 million, or 54 cents
per share for first-quarter 2014, which compared unfavorably with a
net income of $97 million or 66 cents per share in the year-ago
quarter. Barring income tax benefit of $22 million, loss was 68
cents per share, wider than the Zacks Consensus Estimate of a loss
of 21 cents per share.
Sales for the quarter were also down 18% to $940 million from
$1,140.5 million reported in the prior-year quarter and missed the
Zacks Consensus Estimate of $1,039 million. The decline was a
result of significantly lower market pricing for iron ore and
metallurgical coal and a 2% reduction in global iron ore sales
volumes, most of which was weather related.
Cliffs has delivered negative earnings surprises in 2 of the last 4
quarters, with an average negative surprise of 22.50%.
Cliffs' North American Coal segment is facing pressure due to soft
pricing for coal products. The company has lowered its
revenues-per-ton outlook for the division for 2014 to $80-$85 from
its previous outlook of $85-$90. The reduction is primarily due to
lower market pricing for metallurgical coal products.
Pricing of seaborne iron ore and metallurgical coal is expected to
remain volatile in the near term, which may impact revenues in most
of the company's business segments.
Cliffs has also discontinued all developmental activities
indefinitely at the Chromite project in Ontario. Moreover, the
company's move to curtail Phase II expansion at its Bloom Lake
project and idle production at its Wabush Scully Mine in
Newfoundland and Labrador is expected to affect production results
in its Eastern Canadian Iron Ore division in 2014.
The Zacks Consensus Estimate for earnings for 2014 decreased 47.8%
to 12 cents per share over the last 7 days. Similarly, the Zacks
Consensus Estimate for 2015 went down 21.4% to 33 cents per share
over the same period.
Other Stocks to Consider
Better-ranked stocks in the mining industry include
Alderon Iron Ore Corp.
Pretium Resources Inc.
Sandstorm Gold Ltd.
). All these stocks carry a Zacks Rank #1 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CLIFFS NATURAL (CLF): Free Stock Analysis
SANDSTORM GOLD (SAND): Free Stock Analysis
ALDERON IRON (AXX): Free Stock Analysis Report
PRETIUM RES INC (PVG): Free Stock Analysis
To read this article on Zacks.com click here.