Cliffs Natural Resources (CLF) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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 $215.8 million.
  • CLF has traded 5.1 million shares today.
  • CLF is down 3% today.
  • CLF was up 6% yesterday.

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More details on CLF:

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 stock currently has a dividend yield of 2.7%. Currently there is 1 analyst that rates Cliffs Natural Resources a buy, 3 analysts rate it a sell, and 11 rate it a hold.

The average volume for Cliffs Natural Resources has been 8.0 million shares per day over the past 30 days. Cliffs Natural has a market cap of $3.3 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.33 and a short float of 33.7% with 5.35 days to cover. Shares are down 43.3% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cliffs Natural Resources as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Metals & Mining industry average. The net income increased by 37.7% when compared to the same quarter one year prior, rising from $85.10 million to $117.20 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CLIFFS NATURAL RESOURCES INC has improved earnings per share by 6.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CLIFFS NATURAL RESOURCES INC swung to a loss, reporting -$6.59 versus $11.34 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus -$6.59).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, CLIFFS NATURAL RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $297.00 million or 3.66% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CLIFFS NATURAL RESOURCES INC has marginally lower results.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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