Please ensure Javascript is enabled for purposes of website accessibility

Cliffs Natural Resources Inc.'s Stock Surges After Crushing Estimates

By Matthew DiLallo – Feb 9, 2017 at 2:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The iron ore miner sees earnings soaring this year.

What happened

Shares of Cliffs Natural Resources (CLF -5.89%) rocketed on Thursday and were up more than 16% by 2:30 p.m. EST after the iron ore miner reported expectation-beating fourth-quarter results.

So what

Cliffs Natural Resources reported revenue of $754 million during the fourth quarter, up 58% from the year-ago quarter thanks to higher volumes and pricing, which was $78.8 million ahead of analysts' expectations. Earnings from continuing operations, likewise, surged to $81 million, or $0.42 per share, putting last year's net loss of $58 million in the rearview mirror. Meanwhile, even after factoring out an $0.08-per-share loss from discontinued operations, Cliffs blasted past the consensus estimate by $0.11 per share. As a result of that strong showing, Cliffs' full-year adjusted EBITDA came in at $374 million.

Loading of iron ore on very big dump truck.

Image source: Getty Images.

However, as good as 2016 was, Cliffs expects 2017 to be even better. The company sees U.S. iron ore sales volumes rising 4.3% this year to 19 million tons. As a result of those volumes, and its expectation for steady pricing of iron ore and steel, the company expects adjusted EBITDA to more than double this year to $850 million. It also ended last year with just $1.8 billion of net debt, down from $2.5 billion at the end of 2015.

Now what

After several tough years, the iron ore market appears to be getting back on its feet. That's all Cliffs needs right now since its bullish outlook only requires pricing to hold at last month's levels. Because of this, it could easily exceed expectations if pricing continues to improve. However, if prices start to slide, it could quickly sour that outlook.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Cliffs Natural Resources. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cliffs Natural Resources Inc. Stock Quote
Cliffs Natural Resources Inc.
$13.27 (-5.89%) $0.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.