Cliffs Natural Resources (CLF) Is Today's Perilous Reversal Stock

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.

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 $89.4 million.
  • CLF has traded 4.7 million shares today.
  • CLF is down 3.2% today.
  • CLF was up 9.8% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CLF with the Ticky from Trade-Ideas. See the FREE profile for CLF NOW at Trade-Ideas

More details on CLF:

Cliffs Natural Resources Inc., a mining and natural resources company, produces iron ore and metallurgical coal. The stock currently has a dividend yield of 10.2%. Currently there are 3 analysts that rate Cliffs Natural Resources a buy, 5 analysts rate it a sell, and 8 rate it a hold.

The average volume for Cliffs Natural Resources has been 9.6 million shares per day over the past 30 days. Cliffs Natural has a market cap of $829.2 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.28 and a short float of 46.8% with 4.75 days to cover. Shares are down 24.2% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cliffs Natural Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 3068.1% when compared to the same quarter one year ago, falling from $43.30 million to -$1,285.20 million.
  • Net operating cash flow has decreased to $254.90 million or 44.58% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 69.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 4340.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • CLIFFS NATURAL RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CLIFFS NATURAL RESOURCES INC swung to a loss, reporting -$47.52 versus $2.33 in the prior year. This year, the market expects an improvement in earnings (-$0.46 versus -$47.52).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 18.8%. Since the same quarter one year prior, revenues fell by 15.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

If you liked this article you might like

The President Must Show 'America First' Isn't 'America Alone': Market Recon

The President Must Show 'America First' Isn't 'America Alone': Market Recon

Masco, Diplomat Pharmacy, Vail Resorts: 'Mad Money' Lightning Round

Masco, Diplomat Pharmacy, Vail Resorts: 'Mad Money' Lightning Round

What it Takes to Power This Bull: Cramer's 'Mad Money' Recap (Thursday 11/30/17)

What it Takes to Power This Bull: Cramer's 'Mad Money' Recap (Thursday 11/30/17)

These Stocks Are Changing Course

These Stocks Are Changing Course

Insiders Are Loading Up on Kite Pharma, Cliffs Natural Resources and More

Insiders Are Loading Up on Kite Pharma, Cliffs Natural Resources and More