The case for & against
Bull & Bear analysis
Bullish
Cleveland-Cliffs Inc. (NYSE: CLF) is a leading supplier of flat-rolled steel products and iron ore pellets in North America, primarily catering to the automotive and construction industries. The company stands out for its significant vertical integration, controlling the majority of its raw material supply chain. Cleveland-Cliffs is at the forefront of a strong resurgence in the domestic steel sector, notably benefiting from favorable trade policies and shifting market preferences, particularly in automotive manufacturing where the shift from aluminum to steel is gaining momentum.
Bull says
- ↑Automotive OEM order book strong; expects $250–500M EBITDA boost starting H2 2025
- ↑Q2 shipments topped 4.1 Mt; Q1 adjusted EBITDA $95 M (+$274 M YoY)
- ↑Maintains $3 B liquidity for modernization and strategic investments
- ↑Targets $300 M annual cost savings; unit costs down $10/ton in 2026
- ↑ASP up $68/ton YoY; US tariffs should support ~$60/ton price increases
- ↑Analyst optimism strong: rising earnings revisions and high book-to-price
Bear says
- ↓Profitability remains poor: negative earnings yield and low margins
- ↓Debt levels high; asset sales plan to raise $425 M for debt paydown
- ↓Share volatility elevated; recent Morgan Stanley downgrade reflects caution
- ↓Canadian pricing disconnect and dumped imports strain profit margins
- ↓Energy cost spike cut ~$80 M from Q1 EBITDA
- ↓High leverage and volatility amplify financial distress risk
Investment themes with CLF
Infrastructure Development↑ +0.48%
DE · HWM · TT
Steel↑ +2.09%
RIO · BHP · NUE
Earnings Call · Q1 2026 · Mgmt. Guidance
Updated 04-21-2026neutral
Transcript signals
Bull points
- Our adjusted EBITDA in the quarter was $95 million, a $274 million increase from a year ago, due primarily to increased pricing.
- first quarter shipments totaled just over 4.1 million tons, which represents a recovery of more than 300,000 tons sequentially.
- Shipments should increase further into Q2 as this trend continues. That volume recovery is critical because of the fixed cost nature of our business. Every incremental ton we produce and ship has a disproportionate impact on margins.
Bear points
- We have three EAF facilities and two integrated facilities in the unregulated states of Ohio and Pennsylvania, and when prices jump like they did during the cold weather months, we feel a direct impact. All factors considered, the energy spike drove an $80 million negative impact to EBITDA on Q1 relative to historical expectations.
- The cost of fuel, for example, has impacted mining costs at our iron ore pelletizing operations, and scrap has continued to grind higher as well.
- Combining these with the impacts of some scheduled outages in Q2, our Q2 costs should tick up another $15 per ton higher before falling meaningfully in the back half of the year.
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