Stocks to Watch: Cleveland Cliffs Could Bring Back Dividend

by | Apr 22, 2022 | Stocks to Watch

Keep an eye on Cleveland-Cliffs (CLF).

The steel stock could see higher highs after announcing it would “seriously consider reinstituting a dividend,”

In fact, according to Street Insider, CEO Lourenco Goncalves said on the company’s Q1 earnings call: “We will continue to pay down debt. So, this number will continue to be reduced towards the end of the year. And at a certain point, we are going to seriously consider reinstituting a dividend. At this point, a dividend is not being instituted right now because we feel like we are getting more bang for the buck by paying down debt.”

All after posted Q1 earnings.

For the quarter, the company said revenue came in at $5.94 billion, as compared to $4 billion year over year. Analysts were looking for $5.4 billion. EPS came in at $1.50, as compared to seven cents year over year. Analysts were looking for $1.40.

The company also increased its full-year 2022 average selling price expectation by $220 to $1,445 per net ton, compared to its previous guidance of $1,225 per net ton. The increase is driven by higher-than-expected prices on renewals of fixed-price contracts resetting April 1; higher expected spreads between hot-rolled and cold-rolled steel; and a higher futures curve that currently implies an average hot-rolled coil price of $1,300 per net ton for the full-year 2022, as noted by MarketWatch.

Helping, earlier this week, Credit Suisse raised its price target on CLF to $37 from $34.

After running from $16 in February to $30.35, we’d like to see the CLF stock break from consolidation. If it can, we believe the stock can test $35, $40, long-term.

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