CLF Stock Risk & Deep Value Analysis
Cleveland-Cliffs Inc
Basic Materials • Steel
DVR Score
out of 10
What You Need to Know About CLF Stock
We analyzed Cleveland-Cliffs Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran CLF through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Aggressive. Here's what we found.
CLF Risk Analysis & Red Flags
What Could Go Wrong
Sustained high energy costs and a significant downturn in the automotive or broader industrial sector could severely impact profitability and cash flow, making its substantial debt load unsustainable without further restructuring or equity dilution, potentially leading to a sharp decline in share price.
Risk Matrix
Overall
Aggressive
Financial
High
Market
High
Competitive
Medium
Execution
Medium
Regulatory
Low
Red Flags
- ⚠
High debt-to-equity ratio (~$7.7 billion total debt as of Q1 2026)
- ⚠
Negative free cash flow of -$477 million in Q1 2026
- ⚠
Stock dropped over 10% in pre-market trading following Q1 earnings despite revenue beat
- ⚠
Continued GAAP net losses in Q1 2026
Upcoming Risk Events
- 📅
Significant macroeconomic downturn or recession impacting steel demand
- 📅
Prolonged period of high energy costs
- 📅
Sharp decline in steel selling prices
When to Reconsider
- 🚪
Failure to achieve positive free cash flow by Q3 2026
- 🚪
Significant and sustained decline in average steel selling prices (e.g., below $900/ton)
- 🚪
Announcement of a major equity raise leading to significant dilution, or further debt downgrades
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What Does Cleveland-Cliffs Inc (CLF) Do?
Market Cap
$5.85B
Sector
Basic Materials
Industry
Steel
Employees
30,000
Cleveland-Cliffs Inc. operates as a flat-rolled steel producer in the United States, Canada, and internationally. The company offers hot-rolled, cold-rolled, electrogalvanized, hot-dip galvanized and galvannealed, aluminized, galvalume, enameling, and advanced high-strength steel products; austenitic, martensitic, duplex, precipitation hardening, and ferritic stainless-steel products; steel plates; and grain oriented and non-oriented electrical steel products, as well as slab, rail, scrap, iron ore, coal, coke, and tool and die, stamped components. It also provides tubular components, including carbon steel, stainless steel, and electric resistance welded tubing products. In addition, the company offers tin mill products; hot and cold stamp assembly, tooling, and sampling solutions; ingots, rolled blooms, and cast blooms; and hot-briquetted iron products. Further, it owns five iron ore mines in Minnesota and Michigan. The company serves automotive, infrastructure, and manufacturing industries; and distributors and converters, and steel producers. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.
Visit Cleveland-Cliffs Inc WebsiteInvestment Thesis
Cleveland-Cliffs represents a cyclical value recovery opportunity in the North American steel market. Its strong vertical integration, leading position in automotive, and ongoing operational improvements (evidenced by Q1 2026 Adjusted EBITDA swing and Q2 FCF projection) position it to benefit from an improving industrial cycle and potential infrastructure spending. While not a 10x growth play, a successful turnaround and debt management could yield modest returns for a patient, risk-tolerant investor.
Is CLF Stock Undervalued?
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CLF Price Targets & Strategy
12-Month Target
$12.00
Bull Case
$15.00
Bear Case
$7.00
Valuation Basis
Based on 0.38x FY26E P/S multiple on estimated $17.5 billion FY26 revenue.
Entry Strategy
Consider dollar-cost averaging on dips towards $8.50-$9.50, establishing a base near recent support levels ($8.93 post-earnings low).
Exit Strategy
Take 50% profit at $14.00, reassess above $16.00 (52-week high). Implement a stop-loss order if price closes below $7.00.
Portfolio Allocation
1-3% for aggressive risk tolerance; not suitable for conservative or moderate portfolios given the high-risk, low-growth profile for 10x potential.
Price Targets & Strategy
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Is CLF Financially Healthy?
Valuation
P/E Ratio
-4.38
Forward P/E
81.40
EV/EBITDA
16.65
PEG Ratio
0.01
Price/Book
1.14
Price/Sales
0.35
Profitability
Gross Margin
-2.87%
Operating Margin
-6.64%
Net Margin
-6.42%
Return on Equity
-20.91%
Revenue Growth
1.55%
EPS
$-2.34
Balance Sheet
Current Ratio
1.95
Quick Ratio
0.50
Debt/Equity
1.25
Total Debt
$8.04B
Cash & Equivalents
$66.00M
Cash Flow
Operating Cash Flow
-$325.00M
EBITDA
-$330.00M
Other
Beta (Volatility)
2.01
Does CLF Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Stable
Moat Sources
3 Identified
The moat is durable due to the immense capital investment required for integrated steel production and the benefits of vertical integration. It would be prohibitively expensive and time-consuming for new entrants to replicate CLF's scale and supply chain. However, as steel is largely a commodity, external market forces prevent a 'wide' moat.
Moat Erosion Risks
- •Technological advancements in steelmaking by competitors that significantly reduce costs or carbon footprint
- •Sustained global oversupply of steel impacting pricing power
- •Escalating regulatory costs related to environmental compliance
CLF Competitive Moat Analysis
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CLF Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral-Bearish (reflecting stock price drop and general investor cautiousness in cyclical heavy industry)
Institutional Sentiment
Neutral-Negative (post-earnings price action suggests institutional concern, no reported upgrades)
Insider Activity (Form 4)
Minor insider sale reported: A Form 144 filing on April 22, 2026, indicated an unnamed officer/director sold 8,000 common shares originating from restricted stock vesting. This appears to be a routine, non-material transaction.
Options Flow
Normal options activity (no specific unusual options activity or significant put/call skew reported in the provided research).
Earnings Intelligence
Next Earnings
Estimated Late July 2026 (for Q2 2026)
Surprise Probability
Medium
Historical Earnings Pattern
The stock dropped over 10% in pre-market trading after Q1 2026 earnings, suggesting high sensitivity to reported results and outlook, even when revenue estimates are beaten.
Key Metrics to Watch
Competitive Position
Top Competitor
NUE (Nucor Corp.)
Market Share Trend
Stable (maintains leading position in North American flat-rolled steel, especially in automotive).
Valuation vs Peers
CLF likely trades at a discount on forward P/E due to current negative earnings, but may have a higher EV/EBITDA compared to more financially robust peers like Nucor due to its higher debt load.
Competitive Advantages
- •Vertical integration (iron ore mining to finished steel)
- •Strategic focus on value-added sheet products for the automotive industry
- •HBI production capability for lower-carbon steelmaking
Market Intelligence
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What Could Drive CLF Stock Higher?
Near-Term (0-6 months)
- •Q2 2026 Earnings report (expected positive free cash flow)
- •Sustained strength in steel pricing or automotive demand
Medium-Term (6-18 months)
- •Progress on debt reduction initiatives
- •Significant US infrastructure spending initiatives
- •Increased adoption of lower-carbon steel products (HBI)
Long-Term (18+ months)
- •Continued de-carbonization trends in heavy industry
- •Potential for industry consolidation among North American steel producers
Catalysts & Growth Drivers
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What's the Bull Case for CLF?
- ✓
Consistent delivery of positive free cash flow in subsequent quarters
- ✓
Significant and sustained increases in North American steel benchmark prices
- ✓
Announcements of material debt reduction or refinancing efforts
Bull Case Analysis
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Competing with CLF
See how Cleveland-Cliffs Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Cleveland-Cliffs Inc CLF | $5.8B | 2.0 | -4.4 | $18.6B | -6.4% | 1.6% | |
Air Products and Chemicals Inc APD | $65.8B | 1.2 | -197.5 | $12.0B | -2.7% | 1.4% | Compare → |
Freeport-McMoRan Inc FCX | $88.3B | 0.6 | 40.1 | $24.9B | 7.8% | -28.0% | Compare → |
Newmont Corporation NEM | $130.0B | 1.0 | 17.4 | $22.7B | 31.7% | 21.0% | Compare → |
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How Cleveland-Cliffs Inc Makes Money
Cleveland-Cliffs Inc. is a fully integrated flat-rolled steel producer in North America. The company mines its own iron ore from assets in Michigan and Minnesota, processes it into iron ore pellets and hot-briquetted iron (HBI), and then uses these materials in its blast furnaces and electric arc furnaces to produce various types of steel. Its primary customers are industries that require high-quality sheet steel, such as automotive manufacturers, appliance makers, and the construction sector. This vertical integration allows Cliffs to control its raw material costs and quality, providing a competitive advantage in the steel production value chain.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Cleveland-Cliffs Inc (CLF)?
As of May 5, 2026, Cleveland-Cliffs Inc has a DVR Score of 2.0 out of 10, placing it in the "Risk Trap" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Cleveland-Cliffs Inc?
Cleveland-Cliffs Inc's market capitalization is approximately $5.8B. The company operates in the Basic Materials sector within the Steel industry.
What ticker symbol does Cleveland-Cliffs Inc use?
CLF is the ticker symbol for Cleveland-Cliffs Inc. The company trades on the NYQ.
What is the risk level for CLF stock?
Our analysis rates Cleveland-Cliffs Inc's overall risk as Aggressive. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of CLF?
Cleveland-Cliffs Inc currently has a price-to-earnings (P/E) ratio of -4.4. This is below the market average, which could indicate the stock is undervalued or facing headwinds.
Is Cleveland-Cliffs Inc's revenue growing?
Cleveland-Cliffs Inc has reported revenue growth of 1.6%. The company is growing at a moderate pace.
Is CLF stock profitable?
Cleveland-Cliffs Inc has a profit margin of -6.4%. The company is currently unprofitable.
How often is the CLF DVR analysis updated?
Our AI-powered analysis of Cleveland-Cliffs Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on May 5, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for CLF (Cleveland-Cliffs Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.