February 13, 2013
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.