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Earnings Beat Could Change The Case For Cliffs Stock

Simply Wall St · 1d ago
  • Cleveland-Cliffs reported third quarter 2026 sales of US$5.61b and net income of US$152m, returning to profitability after reporting a loss a year earlier, with earnings per share turning positive on both a basic and diluted basis.
  • The business paired this earnings rebound with a materially higher 2027 adjusted EBITDA outlook and plans for debt reduction and mill modernization, indicating a focus on contract quality, cost discipline, and long term steelmaking capacity.
  • We will now look at how Cleveland-Cliffs' investment narrative could be reshaped by this earnings rebound and upgraded 2027 EBITDA guidance.
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Cleveland-Cliffs Investment Narrative Recap

To own Cleveland-Cliffs, you need to believe this earnings recovery can translate into steadier cash generation while the balance sheet gradually improves. The Q3 return to profit and US$612 million of adjusted EBITDA give management more room to work with. The key near term catalyst is whether this momentum holds through the fourth quarter, when cash generation is under close scrutiny.

The biggest risk still sits with leverage and exposure to steel price swings. The business remains sensitive to any hit in pricing or volumes, or to cost spikes that reverse recent margin gains. If import policy, energy costs or demand shift against Cleveland-Cliffs, the path to lower debt could become much harder.

The most relevant announcement around this print is management’s call that 2027 adjusted EBITDA could exceed US$4b. That outlook leans heavily on existing contract structures, current trade protection and execution on cost work. For you, the question is whether this earnings power feels repeatable through a full steel cycle, not just one strong quarter.

The same setup feeds directly into catalysts and risks. Stronger earnings could support Cleveland-Cliffs’ stated deleveraging plans, reduce interest expense and create more room for mill upgrades such as Middletown Works. On the other hand, if future quarters fall short of this EBITDA ambition, or debt reduction stalls, the narrative could quickly shift back to balance sheet strain and cyclicality.

Cleveland-Cliffs' current analyst story points to revenues of US$23.6b and earnings of US$1.3b by 2029, built on an assumed 7.1% annual revenue growth rate and an earnings swing of about US$2.2b from a loss of US$866.0m today to that 2029 forecast level.

Uncover why Cleveland-Cliffs' fair value indicates a 10% potential downside to its current price, which leaves little room for error.

NYSE:CLF 1-Year Stock Price Chart
NYSE:CLF 1-Year Stock Price Chart

Exploring Other Perspectives

Energy cost risk sits at the center of the most bearish Cleveland-Cliffs narrative. Those analysts were penciling in about US$22.3b of 2029 revenue and only US$499.9m of earnings, well below the US$1.3b consensus. You can treat this Q3 earnings rebound as a fresh data point and decide which story feels closer to your view.

Explore 3 other Cleveland-Cliffs fair value estimates, including one that suggests as much as 10% downside from the current price.

Reach Your Own Conclusion

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Looking for more Cleveland-Cliffs style ideas?

If the Cleveland-Cliffs story has you thinking about what else might fit your portfolio, use this moment to widen your watchlist with other companies that combine fundamentals, income potential, or balance sheet strength in different ways.