Cleveland-Cliffs (NYSE:CLF) stock is trending on social media and falling 3% today after the steelmaker reported lower-than-expected second quarter earnings per share (EPS) this morning.
However, its revenue jumped 26% year-over-year and came in ahead of analysts’ mean outlook.
An Earnings Miss and a Revenue Beat
Cleveland-Cliffs reported Q2 EPS of $1.31, versus analysts’ average estimate of $1.36. Its revenue, however, came in at $6.3 billion, compared with the average estimate of $6.13 billion, and its top line surged 26% versus the same period a year earlier.
Meanwhile, the company reported Q2 earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding certain items, of $1.1 billion. Its net cash from operating activities came in at $865 million, up from $511 million during the same period a year earlier. In Q2 of 2021, it generated adjusted EBITDA of $1.4 billion.
On a negative note, its cost of goods sold jumped to $5.21 million from $3.73 million, causing its gross margin to fall to $967 million from $1.19 billion and helping to take its operating income down to $840 million from $1.07 billion.
Cleveland-Cliffs’ CEO, Lourenco Goncalves, said in a statement:
With free cash flow that more than doubled compared to the first quarter, we were able to achieve our largest quarterly debt reduction since our transformation began a couple years ago, while delivering substantial capital returns via share repurchases.
As we move into the second half of the year, we expect this healthy level of free cash flow to continue, as a result of declining capex needs, the accelerating release of working capital, and the heavy use of fixed price sales contracts. In addition, we expect to see further significant increases in the average selling prices for these fixed contracts resetting on October 1.
CLF Stock: Other Notable Points
According to Marketwatch, the price-earnings ratio of CLF stock is just 2.4, while the shares are down 23% so far in 2022.
CLF stock is currently around $16.70 which puts it about $2 away from its 52-week low of $14.32.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
