A disciplined cost control measure for Bloom Lake and its coal business helped Cliffs report a good third quarter. Now that the expense profile is lower, Cliffs is in a better position to benefit from better metal prices. On the downside, if prices drop, Cliffs will not be in as dire a situation as it was previously.
Cliffs looks to be in a healthier position financially and operationally, more so than the market realized. Though its debt is still high, Cliffs aims to reduce it to around $3 billion in the coming year.
This is achievable with capital expenditures dropping and earnings rising. The downside seems limited because costs are manageable. Cliffs may be in a strong position to benefit from improving coal and iron ore pricing.(Written by Chris Lau, a Kapitall Contributor. All data sourced from Zacks Investment Research.)