This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Will Cliffs Continue To Outperform Other Mining Stocks?

Chris Lau, Kapitall: Cliffs is cutting costs to keep up with falling ore prices, but is that enough to keep other mining stocks at bay?

Iron ore producer Cliffs Natural Resources (CLF) is up over $7 from the $20 lows seen in October. Cost cutting and better metal prices supported respectable quarterly results.

[Read more from Kapitall: Rebound for Raw Materials: 4 Commodities Stocks to Consider]

While a large debt load and China's economic slow down once prompted a bearish outlook for the raw materials provider, investors will want to pay attention as to whether Cliffs will continue to turn around its business, or whether its debt will make it easier for its major competitors to dig in to the company's market share.

As the chart below illustrates, Cliffs has had a noticeably robust month, even though raw materials have had a strong fall as a whole.

Click on the interactive chart to see data for these mining companies over time. 

Cost cutting

To adjust for weaker demand in iron ore, Cliffs is reducing its debt profile and reducing Selling, General & Administrative expenses. In its last quarter, iron ore sales dropped 4% to 6.3 million tons.

The decline was due to a force majeure from one customer and the end of a contract with another. Cliffs still expects revenue per ton will be $110 to $115. For 2013, the company believes it will sell between 20-21 million tons of iron ore.

Weaknesses

Uncertainty for the Wabush location will weigh on Cliffs. The company will not know until closer to the end of the year what sales volumes to expect. At Bloom Lake, the sales level was flat, at 1.4 million tons. Asia Pacific Iron Ore sales dropped 8% to 2.8 million tons. Despite the weak quarter for Asia Pacific Iron Ore, Cliffs expects to sell between 10-11 million in 2014.

Click on the interactive chart to see Cliffs price data over time. 

Earnings a bright spot

Cliffs tripled its operating income. In aggregate, the company earned $1.1 billion so far EBITDA. A 17% increase in seaborne iron ore helped contribute to higher revenue. In its third quarter, Cliffs earned $104 million, or $0.66 per diluted share. This is up from $0.59 per share last year.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,079.57 -42.44 -0.25%
S&P 500 1,996.74 -3.38 -0.17%
NASDAQ 4,557.6950 -11.9260 -0.26%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs