NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF) was rising 4.98% to $22.99 on Friday morning after the coal mining company reported fourth-quarter earnings that surpassed analysts' expectations.
The company reported adjusted earnings per share of $1.22, which smashed the 79 cents a share that analysts polled by Thomson Reuters had expected. Fourth-quarter sales of $1.52 billion also beat consensus estimates.
Casablanca Capital, the fourth-largest shareholder in the company, has been calling for Cliffs to spin off its foreign assets and double its dividends. Casablanca announced earlier this week that it would support Lourenco Goncalvez to be the new CEO of Cliffs, but the company announced Thursday that Gary Halverson, who had served as the company's Chief Operating Officer since November, would take over as CEO, effective immediately.
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 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, a generally disappointing performance in the stock itself and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. 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 1.9%. 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 ($3.00 versus -$6.59).
- CLF's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CLF's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.56 is low and demonstrates weak liquidity.
- 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.
- You can view the full analysis from the report here: CLF Ratings Report