Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and deteriorating net income.
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Highlights from the ratings report include:
- 35.70% is the gross profit margin for CLIFFS NATURAL RESOURCES INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.90% trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.22% 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.
- Net operating cash flow has significantly decreased to $96.20 million or 84.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Cliffs Natural Resources Inc., a mining and natural resources company, engages in the production of iron ore pellets, fines and lump ore, and metallurgical coal. The company has a P/E ratio of 3.9, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cliffs Natural has a market cap of $5.54 billion and is part of the
industry. Shares are down 39.5% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff