Cleveland-Cliffs
CLF
$11.83
-2.15%
Cleveland-Cliffs Inc. is a leading North American flat-rolled steel producer and the largest manufacturer of iron ore pellets in the region, operating with a vertically integrated model that spans from raw materials and direct reduced iron to finished steel products, serving markets such as automotive, infrastructure, and appliances. The company distinguishes itself as a dominant domestic steel supplier with a unique self-sufficiency in iron ore and a strategic focus on the automotive sector, positioning it as a key player in the U.S. steel industry. Currently, the investor narrative centers on the company's recovery from a challenging 2025, marked by heavy losses, and its potential to benefit from robust steel demand, pricing improvements, and protective tariffs, as evidenced by recent news of a $1 billion investment in its flagship plant and management's doubled EBITDA guidance for 2026. However, lingering concerns about high debt levels, negative free cash flow, and a cyclical industry backdrop continue to fuel debate over the sustainability of its turnaround.…
CLF
Cleveland-Cliffs
$11.83
Related headlines
Investment Opinion: Should I buy CLF Today?
Rating: Hold. The stock is a speculative turnaround play with a neutral analyst consensus (mean score 2.92) and an average target of $11.90, implying a slight downside. The thesis is that the company is recovering from a deep trough, but the lack of consistent profitability and high debt warrant caution. Supporting evidence includes a low PS ratio of 0.35 (56% below industry), revenue growth of 6.33% YoY, narrowing net losses (from -$495M to -$237M), and management's doubled EBITDA guidance for 2026. However, negative gross margins and negative free cash flow of -$997M TTM undermine the bull case. The rating would upgrade to Buy if the company posts two consecutive quarters of positive gross margins and positive free cash flow, or if the stock drops below $10, offering a wider margin of safety. Conversely, a downgrade to Sell would occur if steel prices collapse or if the company announces a dilutive equity raise. Overall, the stock is undervalued on a PS basis but fairly valued on forward earnings, reflecting the market's skepticism about the turnaround's durability.
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CLF 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The company shows early signs of recovery, but the fundamental metrics are still weak, with negative gross margins and high leverage. The low PS ratio suggests the market is pricing in a pessimistic scenario, but the lack of profitability makes it difficult to justify a bullish stance. If the company can achieve positive gross margins and positive free cash flow within the next two quarters, the stance would be upgraded to bullish. Conversely, if steel prices weaken or losses widen, a bearish stance would be warranted.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Cleveland-Cliffs's 12-month outlook, with a consensus price target around $12.00 and implied upside of +1.4% versus the current price.
Average Target
$12.00
0 analysts
Implied Upside
+1.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$10 - $15
Analyst target range
Cleveland-Cliffs is covered by 10 analysts, with a consensus recommendation of 'hold' and a mean recommendation score of 2.92 (where 1 is strong buy and 5 is sell), indicating a neutral stance. The average target price is $11.90, which implies a downside of -4.8% from the current price of $12.50, suggesting that analysts believe the stock is fairly valued or slightly overvalued at current levels. The distribution of ratings is not provided, but the neutral consensus and recent actions from major firms like Morgan Stanley (downgrade from Overweight to Equal Weight in June 2026) and Wells Fargo (maintaining Equal Weight) reflect a cautious sentiment. The target price range spans from a low of $10.00 to a high of $15.00, with the high target implying a 20% upside and the low target implying a 20% downside, indicating a moderate level of uncertainty. The high target likely assumes successful execution of the company's turnaround plan, including improved steel pricing and demand, while the low target may reflect concerns about continued losses and high debt. Recent institutional ratings show a mix of neutral and hold actions, with no recent upgrades, suggesting that analysts are waiting for more evidence of sustained improvement before becoming more bullish. The wide spread between the low and high targets, combined with the neutral consensus, underscores the high uncertainty surrounding the stock's future performance.
Bulls vs Bears: CLF Investment Factors
Cleveland-Cliffs presents a classic turnaround scenario with conflicting signals. On the bull side, revenue growth, narrowing losses, and a low PS ratio suggest the market is pricing in pessimism that could reverse if the turnaround gains traction. On the bear side, persistent negative gross margins, high debt, and negative free cash flow indicate that the company is still burning cash and may need external financing. The most important tension is whether the recent improvement in steel pricing and demand is sustainable enough to push the company to profitability, or if it is a temporary cyclical uptick that will fade. Currently, the bear case has slightly stronger evidence given the lack of consistent profitability, but the low valuation and management's confident guidance tilt the risk-reward slightly positive for patient investors.
Bullish
- Revenue growth resumed: Q1 2026 revenue grew 6.33% YoY to $4.922B, reversing a period of stagnation. This indicates early signs of demand recovery, supported by robust steel pricing and volume in the domestic market.
- Losses narrowing significantly: Net loss improved to -$237M in Q1 2026 from -$495M in Q1 2025, a 52% reduction. Net margin improved from -10.69% to -4.82%, showing operational leverage as fixed costs are spread over higher revenue.
- Management doubled 2026 EBITDA guidance: Following Q2 results, management raised 2026 EBITDA guidance to double the prior estimate, signaling confidence in sustained steel demand and pricing. This is a strong internal signal of a turnaround.
- Low valuation with high upside potential: PS ratio of 0.35 is 56% below the industry average of ~0.8, and near the bottom of its 5-year range (0.35-2.82). If the turnaround succeeds, the stock could re-rate significantly, offering substantial upside.
Bearish
- Persistent negative gross margins: Gross margin was -1.67% in Q1 2026, marking the fifth consecutive quarter of negative gross profit. This indicates that the company sells products below production cost, a unsustainable situation unless pricing improves drastically.
- High debt and negative free cash flow: Debt-to-equity ratio is 1.34, and free cash flow was -$477M in Q1 2026, with TTM FCF of -$997M. This cash burn, combined with $148M quarterly interest expense, raises solvency concerns if losses persist.
- Analyst consensus is Hold with downside: Average analyst target is $11.90, implying -4.8% downside from the current price of $12.50. Recent downgrades by Morgan Stanley and neutral stances from Wells Fargo reflect skepticism about near-term upside.
- High beta and cyclicality: Beta of 2.115 means the stock is highly sensitive to market swings. Steel is cyclical, and any downturn in automotive or construction demand could hit earnings hard, as seen in the 2025 losses.
CLF Technical Analysis
Cleveland-Cliffs' stock has exhibited a volatile but ultimately upward trajectory over the past year, with a 1-year price change of +18.82%, though this masks significant swings. The current price of $12.50 sits at approximately 75% of its 52-week range (low of $7.73, high of $16.70), indicating a recovery from the lows but still well below the highs. This positioning suggests the stock is in a recovery phase, having rebounded from a trough in early 2026, yet it faces overhead resistance near the $13-$14 zone, which previously acted as a ceiling in June 2026. The 6-month change of +27.16% underscores a strong medium-term uptrend, but the stock remains 25% below its 52-week high, reflecting the market's cautious optimism about the company's turnaround prospects.
Beta
2.11
2.11x market volatility
Max Drawdown
-51.7%
Largest decline past year
52-Week Range
$8-$17
Price range past year
Annual Return
+4.0%
Cumulative gain past year
| Period | CLF Return | S&P 500 |
|---|---|---|
| 1m | -4.7% | -1.6% |
| 3m | -14.2% | +2.2% |
| 6m | +39.8% | +14.4% |
| 1y | +4.0% | +16.2% |
| ytd | -13.0% | +11.1% |
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CLF Fundamental Analysis
Cleveland-Cliffs' revenue trajectory shows a mixed picture, with the most recent quarter (Q1 2026) reporting revenue of $4.922 billion, a 6.33% year-over-year increase from $4.629 billion in Q1 2025, indicating a return to growth after a period of stagnation. However, this growth is inconsistent, as revenue declined sequentially from Q4 2025's $4.313 billion, and the company has experienced negative gross margins for five consecutive quarters, with Q1 2026 gross margin at -1.67% and gross profit of -$82 million. The revenue growth is driven primarily by the Steelmaking segment, which contributed $4.757 billion of the total, while other businesses added only $165 million, highlighting the company's heavy reliance on its core steel operations. Despite the revenue uptick, the company remains unprofitable, with a net loss of -$237 million in Q1 2026, though this loss is narrower than the -$495 million loss in Q1 2025, suggesting a gradual improvement in profitability. The net margin improved to -4.82% from -10.69% a year earlier, but the company's operating margin of -4.21% and EBITDA of just $100 million indicate that cost pressures and weak pricing continue to hamper earnings. The balance sheet shows a debt-to-equity ratio of 1.34, indicating high leverage, and the company generated negative free cash flow of -$477 million in Q1 2026, with a TTM free cash flow of -$997 million, reflecting significant cash burn. The current ratio of 1.95 suggests adequate short-term liquidity, but the negative operating cash flow of -$325 million in the quarter raises concerns about the company's ability to service its debt without external financing, especially given its interest expense of $148 million.
Quarterly Revenue
$4.9B
2026-03
Revenue YoY Growth
+6.3%
YoY Comparison
Gross Margin
-1.7%
Latest Quarter
Free Cash Flow
$-997000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CLF Overvalued?
Given that Cleveland-Cliffs has negative trailing earnings (EPS of -$0.23), the price-to-earnings ratio is not meaningful, so I selected the price-to-sales (PS) ratio as the primary valuation metric. The trailing PS ratio is 0.35, which is remarkably low, while the forward PE ratio of 22.12 suggests the market expects a significant earnings recovery, implying that the company is priced for a substantial turnaround. The EV-to-sales ratio of 0.78 is also low, indicating that the market is valuing the company at a discount to its revenue generation, likely due to its poor profitability and high debt levels. Compared to the industry average PS ratio of approximately 0.8 (based on typical steel sector multiples), Cleveland-Cliffs trades at a discount of about 56%, reflecting its weaker financial performance relative to peers. However, this discount may be justified given the company's negative net margin of -7.94% and negative gross margin of -4.10%, which are far below industry norms, indicating that the company is struggling to generate profits from its sales. Historically, the stock's PS ratio has ranged from a low of 0.35 to a high of 2.82 over the past five years, with the current level near the bottom of that range, suggesting that the market is pricing in a pessimistic outlook. This low valuation could represent a value opportunity if the company's turnaround succeeds, but it also reflects the significant risks associated with its high leverage and cyclical industry.
PE
-4.4x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 2x~12x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-148.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are substantial. The company has a debt-to-equity ratio of 1.34, indicating high leverage, and interest expense of $148M per quarter, which consumes a significant portion of revenue. Negative free cash flow of -$997M TTM means the company is not generating enough cash to cover its obligations, and it may need to raise capital or refinance debt at unfavorable terms. The persistent negative gross margin of -4.10% (TTM) shows that the company is selling steel below its cost of production, which is unsustainable in the long run unless steel prices rise significantly. Revenue concentration in the steelmaking segment (97% of Q1 revenue) exposes the company to sector-specific downturns, and the cyclical nature of steel demand can lead to volatile earnings, as evidenced by the swing from a small profit in Q2 2024 to large losses in subsequent quarters.