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The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missed twice. It has a trailing four-quarter earnings surprise of roughly 2.4%, on average. The company posted an earnings surprise of around 18.8% in the last reported quarter. Benefits of higher year-over-year average selling prices, higher volumes and contributions of AK Steel and ArcelorMittal USA acquisitions are likely to get reflected on the company’s second-quarter performance.
The stock has lost 19.3% in a year’s time compared with the industry’s 25.4% decline.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for the upcoming announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for second-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $6,055.6 million, which calls for a rise of 20% year over year.
Some Factors to Watch For
Cleveland-Cliffs is expected to have gained from its acquisitions of AK Steel and ArcelorMittal USA, which might have had a positive impact on its second-quarter revenues and earnings. It is also expected to have benefited from healthy end-market demand for steel in the quarter, notwithstanding softening domestic steel pricing. It is likely to have witnessed improved volumes in the automotive market. The automotive recovery is likely to have boosted its overall volumes in the quarter to be reported.
U.S. steel prices witnessed a significant downward correction during the second quarter. After surging to nearly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war, the benchmark hot-rolled coil (HRC) prices are on a downward trend and have retreated to levels before the conflict. HRC prices have fallen below the $1,000 per short ton level. The downward drift partly reflects shorter lead times. Mills are also negotiating lower prices for new orders. Fears of a recession have also impacted prices.
Nevertheless, the company is likely to have gained from higher year-over-year average selling prices in the June quarter, supported by fixed contract price increases. The impacts of higher selling prices are likely to reflect on its revenues and margins in the quarter.
However, the company is likely to have faced headwinds from higher unit costs in the second quarter, partly driven by higher energy and scrap costs.
Our proven model does not conclusively predict an earnings beat for Cleveland-Cliffs this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Cleveland-Cliffs is -3.70%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $1.35. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
The Zacks Consensus Estimate for Albemarle's second-quarter earnings has been revised 10.3% upward over the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.80.
Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jul 28, has an Earnings ESP of +1.03% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for Celanese’s second-quarter earnings has been revised 3.9% upward over the past 60 days. The Zacks Consensus Estimate for CE’s earnings for the quarter is currently pegged at $4.58.
FMC Corporation (FMC - Free Report) , expected to release earnings on Aug 2, has an Earnings ESP of +0.62% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for FMC’s second-quarter earnings has been stable over the past 60 days. The consensus estimate for FMC’s earnings for the second quarter stands at $1.90.
Image: Bigstock
Cleveland-Cliffs (CLF) to Post Q2 Earnings: What's in the Cards?
Cleveland-Cliffs Inc. (CLF - Free Report) is slated to release second-quarter 2022 results before the opening bell on Jul 22.
The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missed twice. It has a trailing four-quarter earnings surprise of roughly 2.4%, on average. The company posted an earnings surprise of around 18.8% in the last reported quarter. Benefits of higher year-over-year average selling prices, higher volumes and contributions of AK Steel and ArcelorMittal USA acquisitions are likely to get reflected on the company’s second-quarter performance.
The stock has lost 19.3% in a year’s time compared with the industry’s 25.4% decline.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for the upcoming announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for second-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $6,055.6 million, which calls for a rise of 20% year over year.
Some Factors to Watch For
Cleveland-Cliffs is expected to have gained from its acquisitions of AK Steel and ArcelorMittal USA, which might have had a positive impact on its second-quarter revenues and earnings. It is also expected to have benefited from healthy end-market demand for steel in the quarter, notwithstanding softening domestic steel pricing. It is likely to have witnessed improved volumes in the automotive market. The automotive recovery is likely to have boosted its overall volumes in the quarter to be reported.
U.S. steel prices witnessed a significant downward correction during the second quarter. After surging to nearly $1,500 per short ton in April 2022 due to supply concerns stemming from the Russia-Ukraine war, the benchmark hot-rolled coil (HRC) prices are on a downward trend and have retreated to levels before the conflict. HRC prices have fallen below the $1,000 per short ton level. The downward drift partly reflects shorter lead times. Mills are also negotiating lower prices for new orders. Fears of a recession have also impacted prices.
Nevertheless, the company is likely to have gained from higher year-over-year average selling prices in the June quarter, supported by fixed contract price increases. The impacts of higher selling prices are likely to reflect on its revenues and margins in the quarter.
However, the company is likely to have faced headwinds from higher unit costs in the second quarter, partly driven by higher energy and scrap costs.
ClevelandCliffs Inc. Price and EPS Surprise
ClevelandCliffs Inc. price-eps-surprise | ClevelandCliffs Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Cleveland-Cliffs this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Cleveland-Cliffs is -3.70%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $1.35. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cleveland-Cliffs currently carries a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Aug 3, has an Earnings ESP of +17.01% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Albemarle's second-quarter earnings has been revised 10.3% upward over the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.80.
Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jul 28, has an Earnings ESP of +1.03% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for Celanese’s second-quarter earnings has been revised 3.9% upward over the past 60 days. The Zacks Consensus Estimate for CE’s earnings for the quarter is currently pegged at $4.58.
FMC Corporation (FMC - Free Report) , expected to release earnings on Aug 2, has an Earnings ESP of +0.62% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for FMC’s second-quarter earnings has been stable over the past 60 days. The consensus estimate for FMC’s earnings for the second quarter stands at $1.90.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.