Cleveland-Cliffs to Post Q1 Earnings: What's in Store for the Stock?

Cleveland-Cliffs Inc. CLF is slated to release first-quarter 2025 results after the closing bell on May 7.

CLF has a trailing fourth-quarter negative earnings surprise of roughly 5.4%, on average. It delivered a negative earnings surprise of around 4.6% in the last reported quarter. While CLF is expected to have benefited from actions to lower costs and higher volumes, lower year-over-year prices are likely to have weighed on its performance in the first quarter.

The CLF stock has lost 49.9% in the past year compared with the Zacks Steel Producers industry’s 34.5% decline.

Let’s see how things are shaping up for the upcoming announcement.

What Do CLF’s Revenue Estimates Say?

The Zacks Consensus Estimate for first-quarter consolidated revenues for Cleveland-Cliffs is currently pegged at $4,596.6 million, which suggests a year-over-year decline of 11.6%.

Factors to Watch For CLF Stock

CLF is expected to have faced headwinds from weaker year-over-year steel prices in the first quarter. U.S. steel prices saw a sharp decline last year amid increased imports and weaker end-market demand. Benchmark hot-rolled coil (HRC) prices tumbled more than 40% last year to close near the $700 per short ton level from $1,200 per short ton at the beginning of 2024. 

The recent steel mill price hikes and the Trump administration's imposition of a 25% tariff on all steel imports into the United States have led to an uptick in HRC prices to above $900 per short ton. However, the full benefits of the price uptick are unlikely to be reflected in steel companies' first-quarter performance. Also, a significant recovery in steel prices is not expected over the near term, given the weak manufacturing and construction backdrop and a still-challenging demand environment.  

Weaker selling prices are likely to have impacted CLF’s performance in the quarter to be reported. Our estimate for the average net selling price per net ton of steel products is $986, indicating a roughly 16.1% year-over-year decrease. 

Nevertheless, Cleveland-Cliffs is expected to have benefited from actions to lower steelmaking unit costs in the first quarter. CLF realized a roughly $15 per ton sequential decline in unit costs in the fourth quarter of 2024. It is expected to continue to have benefited from reduced steel unit costs in the first quarter, aided by the Stelco acquisition. CLF expects a reduction of approximately $40 per net ton in unit costs in 2025 compared with 2024. Lower costs are expected to have supported its margins.

The company is also expected to have gained from higher volumes in the March quarter, aided by higher volumes in automotive and contributions from Stelco. Volumes are expected to have been driven by higher demand. Our estimate for external sales volumes for steel products stands at 4.06 million net tons, suggesting a 3% year-over-year rise.

Cleveland-Cliffs Inc. Price and EPS Surprise

Cleveland-Cliffs Inc. price-eps-surprise | Cleveland-Cliffs Inc. Quote

What Our Model Unveils for CLF Stock

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 CLF is -25.19%. The Zacks Consensus Estimate for the first quarter is currently pegged at a loss of 67 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CLF currently carries a Zacks Rank #3 (Hold).

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Basic Materials Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

ICL Group Ltd ICL, scheduled to release earnings on May 19, has an Earnings ESP of +12.50% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for ICL’s earnings for the first quarter is currently pegged at 8 cents.

Wheaton Precious Metals Corp. WPM, slated to release earnings on May 8, has an Earnings ESP of +1.40% and carries a Zacks Rank #3 at present.

The consensus mark for WPM’s first-quarter earnings is currently pegged at 50 cents.

Nutrien Ltd. NTR, scheduled to release earnings on May 7, has an Earnings ESP of +2.41%.

The Zacks Consensus Estimate for NTR's earnings for the first quarter is currently pegged at 33 cents. NTR currently carries a Zacks Rank #3.

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This article originally published on Zacks Investment Research (zacks.com).

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