| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 6.80 | -51 |
| Intrinsic value (DCF) | 3.97 | -71 |
| Graham-Dodd Method | 1.80 | -87 |
| Graham Formula | 4.90 | -65 |
Cleveland-Cliffs Inc. (LSE: 0I0H.L) is a leading North American flat-rolled steel producer, specializing in high-quality carbon and stainless steel products. Headquartered in Cleveland, Ohio, the company serves key industries such as automotive, infrastructure, manufacturing, and steel producers. With a history dating back to 1847, Cleveland-Cliffs operates five iron ore mines in Minnesota and Michigan, ensuring a vertically integrated supply chain. The company offers a diverse product portfolio, including hot-rolled, cold-rolled, galvanized, and advanced high-strength steel, as well as tubular components and tinplate products. Cleveland-Cliffs is a critical player in the Industrial Materials sector, contributing to North America's steel production and infrastructure development. Its strategic focus on innovation and sustainability positions it as a key supplier in the evolving steel industry.
Cleveland-Cliffs presents a high-risk, high-reward investment opportunity due to its significant exposure to cyclical steel markets and volatile commodity prices. The company reported a net loss of $754 million in its latest fiscal year, reflecting challenges in cost management and market demand. However, its strong revenue base ($19.2 billion) and vertical integration with iron ore mining provide a competitive edge. The lack of dividends and high beta (2.039) indicate substantial volatility, making it suitable for investors with a high-risk tolerance. Long-term prospects depend on steel demand recovery, particularly in automotive and infrastructure sectors, as well as the company's ability to manage its $7.1 billion debt load.
Cleveland-Cliffs competes in the highly consolidated North American steel industry, where scale and vertical integration are critical. Its acquisition of AK Steel and ArcelorMittal USA has strengthened its position as the largest flat-rolled steel producer in the region. The company's competitive advantages include its captive iron ore supply, reducing reliance on external raw material costs, and its diversified product mix catering to automotive and industrial clients. However, its high debt levels and exposure to cyclical downturns pose risks. Competitors like Nucor and Steel Dynamics benefit from more efficient mini-mill operations, while international players like ArcelorMittal have global scale. Cleveland-Cliffs' focus on high-value steel products and strategic customer relationships helps mitigate some competitive pressures, but pricing power remains constrained by global steel overcapacity.