NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF) was falling 3.7% to $13.85 Thursday after Deutsche Bank lowered its iron ore price estimates and Casablanca Capital sent a letter to shareholders asking for support for its board nominees.
Deutsche Bank expects iron ore prices to average $105 a ton for 2014, down from an earlier estimate of $118 a ton, and $135 a ton in May. The bank expects iron ore prices of about $90 a ton in 2015, down 21% from its earlier estimate.
Also contributing to the loss is a letter sent to Cliffs Natural shareholders by Casablanca Capital, asking them to support the firm's six board nominees.
"We believe Cliffs needs to refocus on its core U.S. Iron Ore business, improve operating profitability and optimize capital allocation," Casablana wrote. "The U.S. Iron Ore business, which has operated in some form for over 165 years, has high strategic value and, we believe under the right leadership, should remain profitable even in a depressed commodity pricing environment."
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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 4.1%. 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