| Valuation method | Value, € | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 22.70 | 115 |
| Graham Formula | 44.50 | 321 |
Cleveland-Cliffs Inc. (CVA.DE) is a leading iron ore mining company headquartered in Cleveland, Ohio, supplying high-quality iron ore pellets to the North American steel industry. Operating primarily through its U.S. Iron Ore segment, the company owns and operates four active mines and one idled mine in Michigan and Minnesota. Cleveland-Cliffs serves integrated steel producers across the U.S., Canada, and Mexico, playing a pivotal role in the industrial materials sector. With a market capitalization of approximately €5.34 billion, the company is a key player in the basic materials industry, contributing to steel production and infrastructure development. Despite its strong market position, Cleveland-Cliffs faces challenges from fluctuating commodity prices and environmental regulations. The company’s strategic focus on vertical integration and cost efficiency enhances its competitive edge in the steel supply chain.
Cleveland-Cliffs presents a mixed investment profile. On the positive side, the company reported strong FY 2022 financials, with revenue of €22.99 billion and net income of €1.34 billion, translating to a diluted EPS of €2.55. Operating cash flow was robust at €2.42 billion, though capital expenditures were significant at €943 million. The company carries a substantial total debt of €4.25 billion, which could pose risks in a downturn. With no dividend payouts, income-focused investors may look elsewhere. The stock’s beta of 0 suggests low correlation with broader market movements, potentially offering stability. However, exposure to cyclical steel demand and iron ore price volatility remains a key risk. Investors should weigh the company’s strong operational performance against its debt load and industry cyclicality.
Cleveland-Cliffs holds a competitive advantage through its vertically integrated operations, supplying iron ore pellets directly to North American steel producers. This integration reduces dependency on third-party suppliers and enhances cost control. The company’s geographic concentration in the Great Lakes region provides logistical benefits, lowering transportation costs for domestic customers. However, its reliance on the North American steel industry exposes it to regional demand fluctuations and trade policies. Competitors with global operations, such as Vale and Rio Tinto, benefit from diversified revenue streams but face higher shipping costs to serve the U.S. market. Cleveland-Cliffs’ focus on pellet production aligns with environmental trends, as pellets are more energy-efficient than traditional iron ore. Nevertheless, the company must navigate increasing regulatory pressures and the steel industry’s shift toward greener production methods. Its lack of international diversification could limit growth compared to global peers, but its strong domestic position ensures steady demand from U.S. steelmakers.