Why Cleveland-Cliffs Stock Popped Today
Cleveland-Cliffs (NYSE:CLF) confirmed today what most steel sector observers expected. Strong steel prices helped the company more than double its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) just since last quarter.
The stock soared more than 20% on the news in early trading. Shares remained higher by 15.3% as of 11:35 a.m. ET.
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Cleveland-Cliffs reported adjusted earnings of $0.28 per share, topping estimates of $0.21, according to a FactSet Research estimate. Adjusted EBITDA was $612 million, and the company expects it to exceed $700 million in the fourth quarter. In Q1 and Q2 combined, adjusted EBITDA was just $381 million.
Investors are jumping into the stock today because the longer-term outlook remains strong, driven by resilient steel prices and contract visibility. Management sees over $4 billion in adjusted EBITDA next year.
Production volumes and average selling prices continue to increase, partly due to steel tariffs limiting imports. Cliffs CEO Lourenco Goncalves said the 2027 outlook has materially improved. He stated, "The trade environment continues to support a healthy American steel industry. Imports remain well below historical levels, lead times are extended, and our customers increasingly recognize the value of a reliable domestic supply chain."
The earnings report likely means profits will also be strong for peer domestic steel producers Nucor and Steel Dynamics. Investors interested in participating in the steel sector should research those two companies as well, as both have lower debt levels and will benefit from robust pricing.
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Howard Smith has positions in Nucor and has the following options: short December 2026 $200 calls on Nucor, short December 2026 $240 calls on Nucor, short December 2026 $300 calls on Nucor, and short January 2027 $210 calls on Nucor. The Motley Fool has positions in and recommends FactSet Research Systems. The Motley Fool recommends Steel Dynamics. The Motley Fool has a disclosure policy.
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