Cleveland-Cliffs Q3 preview: Will increased auto demand spur earnings beat?

Cleveland-Cliffs (NYSE:CLF) is scheduled to announce Q3 outcomes on Tuesday, Oct. 25, earlier than market open.

Consensus EPS estimate is $0.51 and consensus income estimate is $5.79B (-3.5% Y/Y).

Over the past 2 years, CLF has overwhelmed EPS estimates 25% of the time and income estimates 38% of the time.

Over the past 3 months, EPS estimates have seen 4 downward revisions. Income estimates have seen 1 upward revision and three downward.

GLJ Analysis double downgraded Cleveland-Cliffs (CLF) as Q3 earnings estimates are too optimistic. Whereas the Road expects Q3 EBITDA to be ~$1B, the brokerage guided for ~$820M, based mostly on the agency’s implied steerage for flattish manufacturing volumes and working bills, and decrease Q/Q common promoting costs.

SA contributor Leo Nelissen stated regardless of headwinds, Cleveland-Cliffs (CLF) is holding up higher than anticipated due to inner provide chain resilience, fixed-price contracts, low leverage and rebounding auto manufacturing.

Q2 recap:

Shares of the steelmaker fell after its Q2 earnings missed estimates, weighed by increased working prices and provide chain points. CEO Lourenco Goncalves performed down the specter of a recession and better charges hurting auto demand, saying provide chain issues and COVID-related manufacturing outages led to pent-up demand for cars.

Latest information:

• Mesabi Belief (MSB) stated there shall be no distribution this month resulting from uncertainties attributable to Cleveland-Cliffs’ (CLF) transfer to increase idling of operations at Northshore Mining.
• Cleveland-Cliffs’ (CLF) new 4-year labor cope with the United Steelworkers was ratified, with base wages anticipated to rise 20% in the course of the contract interval.
• The agency’s shares doubtless gained after better-than-expected Q3 manufacturing information from GM and Ford because it has heavy publicity to the automotive market.
• The steelmaker reportedly raised present spot market base costs for all carbon metal scorching rolled, chilly rolled and coated metal merchandise by a minimal of $75/ton.