Why Cliffs Natural Resources (CLF) Stock Hit a 52-Week Low Today

NEW YORK (TheStreet) -- Cliffs Natural Resources (CLF) was falling 8.1% to $12.86, hitting a 52-week low of $12.73, Monday due to concerns of oversupply of coal and low profits.

Demand for coal in China may peak as soon as this year, according to Bloomberg, which could further hurt coal miners such as Cliffs Natural Resources.

Investments in coal may be hurt by falling costs for renewable energies and global warming regulation, the Carbon Tracker Initiative said.

"There are a host of signals that Chinese demand for coal is close to peaking which will cause a seismic shift in the market," Carbon Tracker Initiative CEO Anthony Hobley wrote in a report. "This is potentially a risky business for investors."

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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 some concerns, 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:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 101.21% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies 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.
  • CLF's debt-to-equity ratio of 0.61 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 0.57 is low and demonstrates weak liquidity.
  • You can view the full analysis from the report here: CLF Ratings Report

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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