Cleveland-Cliffs Get Analyst Downgrade On Bullish Consensus, Higher Multiple Than Peer

GLJ Research believes that Cleveland-Cliffs Inc's CLF FY Q3 EBITDA will come in around $820 million vs. the consensus of $1.024 billion. The analyst downgraded it to Sell with a price target of $13.44.
Last week, CLF reported revenue/GAAP-EPS of $6.34 billion / $1.13 vs. the estimated $6.13 billion / $1.39.
However, it was the company's implied guidance for flattish volumes and operating expenses and average selling prices around $100/ ton lower QoQ in Q3.
With $820 million EBITDA and CLF's current enterprise value of $13.074 billion, GLJ arrives at an EV/EBITDA multiple of 4.0x, whereas, based on a similar calculation for United States Steel Corporation X EBITDA estimate of $1.093 billion, the implied EV/EBITDA multiple is 1.5x.
Stated differently, CLF trades at a 2.6x premium to its closest peer.
Admittedly, while there is a risk that X tempers expectations on its forward earnings when it reports after the close this Thursday, with more in the U.S.,
GLJ believes US Steel is better positioned than CLF despite more exposure to the construction segment.
As such, overall, CLF is better positioned than money-losing "meme"/green stocks trading at an absurd multiple to sales.
Price Action: CLF shares are down 1.01% at $16.18 during the market session on the last check Wednesday.

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