There's been a notable change in appetite for Cleveland-Cliffs Inc. (NYSE:CLF) shares in the week since its first-quarter report, with the stock down 13% to US$18.55. It was a pretty negative result overall, with revenues of US$5.2b missing analyst predictions by 2.5%. Worse, the business reported a statutory loss of US$0.14 per share, a substantial decline on analyst expectations of a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the nine analysts covering Cleveland-Cliffs provided consensus estimates of US$21.3b revenue in 2024, which would reflect a measurable 2.8% decline over the past 12 months. Statutory earnings per share are predicted to soar 66% to US$1.36. Before this earnings report, the analysts had been forecasting revenues of US$21.4b and earnings per share (EPS) of US$1.31 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$21.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Cleveland-Cliffs, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$16.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Cleveland-Cliffs shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.7% by the end of 2024. This indicates a significant reduction from annual growth of 41% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cleveland-Cliffs is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Cleveland-Cliffs' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$21.50, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cleveland-Cliffs analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Cleveland-Cliffs is showing 2 warning signs in our investment analysis , you should know about...
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