Why Cliffs Natural Resources' Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: It was another bad day for Cliffs Natural Resources (NYSE: CLF  ) , as shares sold off 20% after earnings.

So what: The company reported a massive quarterly loss of $1.62 billion, or $11.36 per share, more than a third of what the entire company is worth today. To make matters worse, the company cut its dividend from $0.625 per share to $0.15, which kills a high dividend yield in the stock.  

Now what: Low prices for iron ore and coal have hurt everybody in mining, and Cliffs Natural is no different. The company is even offering up 9 million shares in an effort to cut debt while it still can and is converting preferred shares. These are desperate moves, and I certainly wouldn't be buying this floundering company today.

A deeper look
Cliffs Natural Resources has grown from a domestic iron ore producer into an international player in both the iron ore and metallurgical coal markets. It has performed well, relative to many competitors, in a very cyclical industry because of several factors that are likely to remain advantageous for Cliffs' management. For details on these advantages and more, click here now to check out The Motley Fool's brand new premium report on the company.

 


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2254095, ~/Articles/ArticleHandler.aspx, 8/27/2014 3:19:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement