Trade-Ideas LLC identified

Cliffs Natural Resources

(

CLF

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cliffs Natural Resources as such a stock due to the following factors:

  • CLF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.0 million.
  • CLF has traded 273,519 shares today.
  • CLF is down 3.9% today.
  • CLF was up 8.5% yesterday.

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More details on CLF:

Cliffs Natural Resources Inc., a mining and natural resources company, produces and supplies iron ore. The company operates five iron ore mines in Michigan and Minnesota; and Koolyanobbing iron ore mining complex located in Western Australia, which produces lump and fines iron ore. CLF has a PE ratio of 5. Currently there are no analysts that rate Cliffs Natural Resources a buy, 5 analysts rate it a sell, and 7 rate it a hold.

The average volume for Cliffs Natural Resources has been 5.4 million shares per day over the past 30 days. Cliffs Natural has a market cap of $507.9 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 0.61 and a short float of 26.8% with 5.92 days to cover. Shares are up 78.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cliffs Natural Resources as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • CLIFFS NATURAL RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CLIFFS NATURAL RESOURCES INC reported lower earnings of $0.64 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 219.5% in earnings (-$0.77 versus $0.64).
  • Net operating cash flow has significantly decreased to $97.40 million or 61.78% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for CLIFFS NATURAL RESOURCES INC is rather low; currently it is at 16.85%. Despite the low profit margin, it has increased significantly from the same period last year.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.95%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 108.60% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Along with the very weak revenue results, CLF underperformed when compared to the industry average of 39.7%. Since the same quarter one year prior, revenues plummeted by 53.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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