Analyzing Steel Dynamics (STLD) and Cliffs Natural Resources (CLF)
Steel Dynamics (NASDAQ: STLD) and Cliffs Natural Resources (NYSE:CLF) are both mid-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Risk & Volatility
Steel Dynamics has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, Cliffs Natural Resources has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500.
Steel Dynamics pays an annual dividend of $0.62 per share and has a dividend yield of 1.8%. Cliffs Natural Resources does not pay a dividend. Steel Dynamics pays out 28.6% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Steel Dynamics and Cliffs Natural Resources’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Steel Dynamics||$8.77 billion||0.94||$1.37 billion||$2.17||15.76|
|Cliffs Natural Resources||$2.34 billion||1.01||$480.50 million||$0.22||36.18|
Steel Dynamics has higher revenue and earnings than Cliffs Natural Resources. Steel Dynamics is trading at a lower price-to-earnings ratio than Cliffs Natural Resources, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Steel Dynamics and Cliffs Natural Resources, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cliffs Natural Resources||3||2||3||0||2.00|
Steel Dynamics currently has a consensus price target of $41.85, suggesting a potential upside of 22.32%. Cliffs Natural Resources has a consensus price target of $8.00, suggesting a potential upside of 0.50%. Given Steel Dynamics’ stronger consensus rating and higher probable upside, analysts plainly believe Steel Dynamics is more favorable than Cliffs Natural Resources.
Insider and Institutional Ownership
82.7% of Steel Dynamics shares are held by institutional investors. Comparatively, 58.3% of Cliffs Natural Resources shares are held by institutional investors. 4.2% of Steel Dynamics shares are held by company insiders. Comparatively, 0.5% of Cliffs Natural Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Steel Dynamics and Cliffs Natural Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cliffs Natural Resources||2.44%||-13.83%||7.41%|
Steel Dynamics beats Cliffs Natural Resources on 12 of the 16 factors compared between the two stocks.
About Steel Dynamics
Steel Dynamics, Inc. is a steel producing and a metal recycling company. The Company is engaged in the manufacture and sale of steel products, processing and sale of recycled ferrous and nonferrous metals, and fabrication and sale of steel joists and deck products. Its segments include steel operations, metals recycling operations, steel fabrication operations and Other Operations. It offers a range of steel products, such as sheet products, long products and steel finishing. The steel operations segment includes Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia and Iron Dynamics. The metals recycling operations segment consists of OmniSource Corporation. The fabrication operations produce steel building components. The Other Operations segment consists of subsidiary operations and smaller joint ventures.
About Cliffs Natural Resources
Cleveland-Cliffs Inc, formerly Cliffs Natural Resources Inc., is a mining and natural resources company. The Company is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. The Company’s segments include U.S. Iron Ore and Asia Pacific Iron Ore. The Company is a producer of iron ore pellets, primarily selling production from U.S. Iron Ore to integrated steel companies in the United States, Canada and Mexico. Its Asia Pacific Iron Ore operations are located in Western Australia and consist of its Koolyanobbing operation. The Koolyanobbing operations serve the Asian iron ore markets with direct-shipped fines and lump ore. In addition, the Company operates an iron ore mining complex in Western Australia. In the United States, the Company owned four operational iron ore mines and one indefinitely idled mine.
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