Cleveland-Cliffs
CLF
$11.38
-5.01%
Cleveland-Cliffs Inc. is a vertically integrated flat-rolled steel producer and iron ore pellet manufacturer in North America, serving primarily the automotive industry. As the largest flat-rolled steel producer in the region, it differentiates itself through vertical integration from raw materials to finished steel products. The current investor narrative centers on a dramatic turnaround driven by robust steel demand and pricing, as evidenced by the company's strong Q2 results and doubled EBITDA guidance, which sent shares soaring in late July 2026. However, the stock remains highly volatile due to cyclical steel market dynamics and ongoing tariff impacts.…
CLF
Cleveland-Cliffs
$11.38
Related headlines
Investment Opinion: Should I buy CLF Today?
Rating: Hold. The thesis is that Cleveland-Cliffs is a deep value turnaround play with strong recent momentum, but persistent losses and high debt warrant caution until profitability is demonstrated. The analyst consensus is 'hold' with an average target of $11.35, implying a slight downside from the current price of $11.93.
Supporting Evidence: The stock trades at a PS ratio of 0.35, a 75% discount to the industry average of 1.40, indicating deep value. Revenue grew 6.33% year-over-year in Q1 2026 to $4.922 billion, but gross margin remains negative at -1.67%. Free cash flow is negative $997 million TTM, and the company has a debt-to-equity ratio of 1.34. The implied upside to the average analyst target is -4.9%, while the high target of $15.00 offers 25.7% upside. The forward PE of 33.42 is elevated, reflecting expectations of future profitability.
Risks & Conditions: The biggest risks are failure to achieve positive gross margins, a downturn in steel prices, and the high debt burden. This Hold would upgrade to Buy if the company reports positive gross margins and free cash flow, or if the stock pulls back to $10.00 (low target) with improving fundamentals. It would downgrade to Sell if revenue growth decelerates below 5% or if losses widen. Overall, the stock appears undervalued on a PS basis but fairly valued given its lack of profitability, making it a speculative hold.
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CLF 12-Month Price Forecast
Cleveland-Cliffs is at a pivotal point: recent strong Q2 results and doubled EBITDA guidance suggest a turnaround, but the company remains unprofitable with negative margins and cash flow. The deep value valuation (PS 0.35) provides a margin of safety, but the hold rating and analyst target near the current price indicate limited near-term upside. The neutral stance reflects the balance between potential upside from a successful turnaround and downside risks from cyclical exposure and financial strain. Upgrading to bullish would require evidence of sustained profitability (positive gross margins and net income), while downgrading to bearish would follow a deterioration in steel prices or a failed turnaround.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Cleveland-Cliffs's 12-month outlook, with a consensus price target around $11.75 and implied upside of +3.3% versus the current price.
Average Target
$11.75
0 analysts
Implied Upside
+3.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$10 - $15
Analyst target range
The stock is covered by 10 analysts, with a consensus recommendation of 'hold' and a mean recommendation score of 3.0 (hold). The average target price is $11.35, implying a 4.9% downside from the current price of $11.93. The distribution shows no strong bullish or bearish bias, with recent ratings from major firms like Wells Fargo, BofA, and Citigroup all at 'neutral' or 'equal weight'. The target range spans from $10.00 (low) to $15.00 (high). The high target of $15.00 assumes a successful turnaround with improved pricing and margins, potentially driven by tariffs and strong demand. The low target of $10.00 reflects risks of continued losses, margin compression, or a downturn in steel prices. The relatively narrow spread ($5.00) indicates moderate uncertainty, but the consensus hold rating suggests analysts are waiting for clearer signs of sustained profitability before becoming more bullish.
Bulls vs Bears: CLF Investment Factors
Cleveland-Cliffs presents a compelling turnaround story driven by strong Q2 results and doubled EBITDA guidance, supported by deep value valuation at a PS ratio of 0.35. However, the company remains unprofitable with negative margins, high debt, and negative free cash flow, leading to a consensus hold rating with a target implying slight downside. The bull case hinges on sustained steel demand and margin improvement, while the bear case focuses on continued losses and cyclical risks. The single most important tension is whether the company can achieve positive gross margins and sustainable profitability, which would validate the turnaround and potentially drive significant upside.
Bullish
- Strong Q2 2026 Results and Doubled EBITDA Guidance: Cleveland-Cliffs reported strong Q2 results and doubled its EBITDA guidance, signaling a dramatic turnaround. This positive development sent shares soaring in late July 2026, reflecting robust steel demand and pricing.
- Deep Value with Low PS Ratio: The stock trades at a trailing PS ratio of 0.35, a 75% discount to the industry average of 1.40. This deep value valuation suggests the market is pricing in pessimistic expectations, offering potential upside if the company returns to profitability.
- Recent Price Momentum and Volume Surge: The stock has gained 12.87% in the past month and 22.23% in the past three months, with a volume spike to 69.9 million shares on July 24, 2026. This strong momentum indicates growing investor confidence in the turnaround story.
- Vertical Integration and Automotive Focus: As the largest flat-rolled steel producer in North America, Cleveland-Cliffs benefits from vertical integration from iron ore to finished steel. The automotive industry provides a stable demand base, and protective tariffs support domestic pricing.
Bearish
- Persistent Losses and Negative Margins: The company reported a net loss of $237 million in Q1 2026 and a trailing twelve-month net loss of $1.214 billion. Gross margin was negative at -1.67%, and operating margin was -4.2%, indicating ongoing profitability challenges.
- High Debt and Negative Free Cash Flow: With a debt-to-equity ratio of 1.34 and negative free cash flow of $997 million over the trailing twelve months, the company relies on external financing. This financial strain increases risk, especially in a cyclical downturn.
- Analyst Consensus Hold with Downside to Target: The average analyst target price is $11.35, implying a 4.9% downside from the current price of $11.93. The consensus recommendation is 'hold', with no strong bullish bias, reflecting uncertainty about sustained profitability.
- High Volatility and Cyclical Exposure: With a beta of 2.135, the stock is 113.5% more volatile than the S&P 500. The steel industry is highly cyclical, and the stock's 52-week range of $7.73 to $16.70 highlights significant price swings, posing risk for investors.
CLF Technical Analysis
The stock is in a recovery phase after a deep downtrend, with a 1-year price change of +9.35%, but it remains well below its 52-week high. Currently trading at $11.93, it sits at 71.4% of its 52-week range ($7.73-$16.70), suggesting a rebound from the lows but still far from peak levels. This positioning indicates a potential value opportunity if the recovery continues, though the stock is not yet in a confirmed uptrend. Short-term momentum is strongly positive, with 1-month and 3-month price changes of +12.87% and +22.23%, respectively, accelerating from the 1-year trend. This divergence from the longer-term downtrend suggests a potential trend reversal, supported by a recent surge in volume (69.9 million shares on 7/24) and a relative strength index that likely moved above 50. However, the 6-month change of -20.94% warns that the recovery is fragile. Key support lies at the 52-week low of $7.73, while resistance is at the 52-week high of $16.70. A breakout above $16.70 would signal a strong uptrend, while a breakdown below $7.73 could trigger further declines. With a beta of 2.135, the stock is 113.5% more volatile than the S&P 500, amplifying both upside and downside risks.
Beta
2.13
2.13x market volatility
Max Drawdown
-51.7%
Largest decline past year
52-Week Range
$8-$17
Price range past year
Annual Return
+4.8%
Cumulative gain past year
| Period | CLF Return | S&P 500 |
|---|---|---|
| 1m | +21.3% | -1.6% |
| 3m | +11.6% | +1.5% |
| 6m | -17.3% | +5.4% |
| 1y | +4.8% | +14.8% |
| ytd | -16.3% | +7.0% |
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CLF Fundamental Analysis
Revenue has shown modest growth, with Q1 2026 revenue of $4.922 billion, up 6.33% year-over-year from $4.629 billion in Q1 2025. However, the multi-quarter trend reveals stagnation, as revenue has fluctuated between $4.3 billion and $5.1 billion over the past eight quarters, with no clear acceleration. The Steelmaking segment generated $4.757 billion (96.6% of total revenue), while Other Businesses contributed $165 million, indicating that core steel operations drive performance. The lack of robust growth suggests the investment case hinges on margin expansion rather than top-line acceleration. The company remains unprofitable, with a net loss of $237 million in Q1 2026 and a trailing twelve-month net loss of $1.214 billion. Gross margin was negative at -1.67% in Q1 2026, though this improved from -8.45% in Q1 2025, indicating narrowing losses. Operating margin was -4.2%, still negative but better than -11.6% a year ago. The trajectory toward profitability is positive but slow, and the company must achieve positive gross margins to become sustainably profitable. Cleveland-Cliffs has a debt-to-equity ratio of 1.34, indicating moderate leverage, and a current ratio of 1.95, suggesting adequate liquidity. However, free cash flow was negative $477 million in Q1 2026 and negative $997 million over the trailing twelve months, reflecting heavy capital expenditures and operating cash outflows. ROE is deeply negative at -24.2%, and the company relies on external financing, as evidenced by $454 million in net cash from financing in Q1 2026. The negative free cash flow yield (PCF ratio of -14.15) signals high financial risk.
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?
Since net income is negative, the price-to-sales (PS) ratio is the primary valuation metric. The trailing PS ratio is 0.35, while the forward PS ratio is not directly provided but can be estimated using estimated revenue of $22.12 billion, yielding a forward PS of ~0.30. The gap between trailing and forward PS suggests the market expects revenue growth, which is modest. The stock trades at a PS of 0.35, which is a 75% discount to the industry average PS of 1.40 (based on sector data), indicating a deep value play. This discount is justified by the company's negative net margins (-7.9%) and lack of profitability, compared to industry peers that typically have positive margins. Historically, the PS ratio has ranged from 0.35 to 2.82 over the past five years, with the current level near the bottom of that range. This suggests the market is pricing in pessimistic expectations, potentially offering a value opportunity if the company can return to profitability. However, the low PS also reflects the cyclical downturn and persistent losses.
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 & Operational Risks: Cleveland-Cliffs faces significant financial risks due to persistent losses, with a net loss of $237 million in Q1 2026 and a trailing twelve-month net loss of $1.214 billion. The company's gross margin is negative at -1.67%, and operating margin is -4.2%, indicating that core operations are not yet profitable. High debt levels (debt-to-equity of 1.34) and negative free cash flow of $997 million over the trailing twelve months strain liquidity, requiring external financing to cover capital expenditures and operating shortfalls. The negative free cash flow yield (PCF ratio of -14.15) underscores the cash burn, making the company vulnerable to any downturn in steel prices or demand.
Market & Competitive Risks: The stock trades at a deep value PS ratio of 0.35, but this discount reflects the market's skepticism about profitability. With a beta of 2.135, the stock is highly sensitive to macroeconomic conditions and steel price cycles. Protective tariffs provide a tailwind, but any reduction in tariffs or a global steel glut could pressure margins. The consensus hold rating and average target of $11.35 suggest limited upside potential, and the stock's 52-week range of $7.73 to $16.70 highlights volatility. Recent news indicates that while some steelmakers thrive under tariffs, others struggle, and Cleveland-Cliffs' high fixed costs may hinder its ability to compete effectively.
Worst-Case Scenario: In a worst-case scenario, a sharp downturn in steel prices or a recession could reverse the recent recovery, leading to deeper losses and potential covenant breaches on debt. The stock could fall to its 52-week low of $7.73, representing a 35.2% decline from the current price of $11.93. If the company fails to achieve positive gross margins and free cash flow, it may need to raise capital through dilutive equity offerings, further pressuring the stock. The historical max drawdown of -51.67% indicates that severe losses are possible, and investors could face a loss of over 35% in an adverse scenario.
FAQ
The key risks include: 1) Financial risk: persistent losses (net loss of $237 million in Q1 2026), negative free cash flow of $997 million TTM, and high debt (debt-to-equity 1.34) could lead to liquidity issues. 2) Cyclical risk: steel prices are highly cyclical, and a downturn could reverse the recent recovery; the stock's beta of 2.135 amplifies market moves. 3) Competitive risk: tariffs may not be permanent, and other steelmakers with lower costs could outperform. 4) Company-specific risk: the turnaround may fail if margins do not improve, leading to further losses and potential equity dilution. The most severe risk is a 35% decline to the 52-week low of $7.73.
The 12-month forecast is mixed. The bull case (25% probability) sees the stock reaching $14.00-$16.70 if the turnaround succeeds and profitability is achieved. The base case (50% probability) expects the stock to trade between $10.00 and $12.00, near the analyst average target of $11.35, as losses narrow but persist. The bear case (25% probability) projects a decline to $7.73-$10.00 if steel prices fall or the turnaround stalls. The most likely scenario is the base case, with the stock hovering around current levels until clearer signs of profitability emerge. Key catalysts include the next earnings report and steel price trends.
Based on the price-to-sales ratio of 0.35, CLF appears deeply undervalued compared to the industry average of 1.40, representing a 75% discount. However, this discount is justified by the company's negative net margin of -7.9% and lack of profitability. The forward PE of 33.42 is elevated, reflecting expectations of future earnings. Historically, the PS ratio has ranged from 0.35 to 2.82 over five years, and the current level is near the bottom, suggesting the market is pricing in pessimistic expectations. Overall, the stock is undervalued on a sales basis but fairly valued when considering its poor profitability, making it a classic value trap risk.
Cleveland-Cliffs offers a high-risk, high-reward opportunity. The stock trades at a deep value PS ratio of 0.35, a 75% discount to the industry average, and has strong recent momentum with a 22.23% gain over three months. However, the company is unprofitable with negative margins and free cash flow, and the analyst consensus is 'hold' with an average target of $11.35, implying a slight downside from the current price of $11.93. It could be a good buy for aggressive investors who believe in the turnaround story and are willing to tolerate high volatility (beta 2.135). The biggest downside risk is a 35% decline to the 52-week low of $7.73 if steel prices fall. For conservative investors, it is better to wait for evidence of sustained profitability.
CLF is more suitable for short-to-medium-term trading given its high volatility (beta 2.135) and cyclical nature. The stock has shown strong short-term momentum (12.87% in one month) but remains well below its 52-week high. Long-term investment is risky due to persistent losses, negative free cash flow, and the cyclical steel industry. The company does not pay a dividend (yield 0%), so returns depend entirely on price appreciation. A minimum holding period of 6-12 months is recommended to allow the turnaround to materialize, but investors should monitor quarterly results closely. For long-term buy-and-hold, a more diversified steel ETF or a profitable steelmaker may be preferable.