NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF) was gaining 2% to $16.41 Monday after Macquarie upgraded the stock to "neutral" from "underperform" ahead of the company's annual general meeting.
The analyst firm raised its price target for the company to $17 from $10. Macquarie analysts expect positive results from Cliffs' proxy battle with Casablanca Capital. The activist investor could gain control of Cliffs' board of directors and replace its CEO at the company's annual general meeting Tuesday.
Macquarie also cited Cliffs' guidance for the recovery of its U.S. iron ore division, and cost reduction in its eastern Canada mine.
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TheStreet Ratings team rates CLIFFS NATURAL RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLIFFS NATURAL RESOURCES INC (CLF) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, poor profit margins, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of CLIFFS NATURAL RESOURCES INC has not done very well: it is down 17.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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 92.5% when compared to the same quarter one year ago, falling from $146.00 million to $10.90 million.
- The gross profit margin for CLIFFS NATURAL RESOURCES INC is rather low; currently it is at 21.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.99% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$41.90 million or 110.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CLF's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.57 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: CLF Ratings Report