NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF - Get Report) was falling -5.3% to $15.00 Monday after the company sent an open letter to shareholders regarding its upcoming shareholders meeting.
The open letter urges shareholders to vote for the board of directors using the white card which cotes for seven nominees from Cliffs, and four nominees from activist investor Casablanca Capital. The letter warns that giving Casablanca a majority of the board could result in a "fire sale" of Cliff's assets.
JPMorgan cuts its second quarter EPS estimates for Cliffs to a loss of -34 cents a share from a gain of 19 cents a share, which may also be contributing to the stock's decline. Cliffs will announce its second quarter results on July 24.
TheStreet Ratings team rates CLIFFS NATURAL RESOURCES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLIFFS NATURAL RESOURCES INC (CLF) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, CLIFFS NATURAL RESOURCES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CLF, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 17.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to -$82.00 million or 222.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 165.7% when compared to the same quarter one year ago, falling from $107.00 million to -$70.30 million.
- You can view the full analysis from the report here: CLF Ratings Report