Critical Analysis: Cliffs Natural Resources (CLF) vs. Commercial Metals (CMC)
Cliffs Natural Resources (NYSE: CLF) and Commercial Metals (NYSE:CMC) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitability, dividends and earnings.
Institutional & Insider Ownership
65.2% of Cliffs Natural Resources shares are held by institutional investors. Comparatively, 91.4% of Commercial Metals shares are held by institutional investors. 0.5% of Cliffs Natural Resources shares are held by insiders. Comparatively, 1.3% of Commercial Metals shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Risk and Volatility
Cliffs Natural Resources has a beta of 1.69, meaning that its share price is 69% more volatile than the S&P 500. Comparatively, Commercial Metals has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500.
This is a summary of recent recommendations and price targets for Cliffs Natural Resources and Commercial Metals, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cliffs Natural Resources||3||2||4||0||2.11|
Cliffs Natural Resources presently has a consensus price target of $8.29, indicating a potential upside of 11.97%. Commercial Metals has a consensus price target of $21.29, indicating a potential upside of 22.97%. Given Commercial Metals’ stronger consensus rating and higher possible upside, analysts clearly believe Commercial Metals is more favorable than Cliffs Natural Resources.
This table compares Cliffs Natural Resources and Commercial Metals’ 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%|
Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 2.8%. Cliffs Natural Resources does not pay a dividend. Commercial Metals pays out 73.8% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Cliffs Natural Resources and Commercial Metals’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cliffs Natural Resources||$2.34 billion||0.94||$480.50 million||$0.22||33.64|
|Commercial Metals||$4.82 billion||0.42||$306.06 million||$0.65||26.63|
Cliffs Natural Resources has higher revenue, but lower earnings than Commercial Metals. Commercial Metals 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.
Commercial Metals beats Cliffs Natural Resources on 9 of the 16 factors compared between the two stocks.
About Cliffs Natural Resources
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, as of December 31, 2016. As of December 31, 2016, it operated four iron ore mines located in Michigan and Minnesota.
About Commercial Metals
Commercial Metals Company, together with its subsidiaries, manufactures, recycles and markets steel and metal products, related materials and services through a network. The Company’s Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. The Americas Mills segment consists of steel mills, commonly referred to as minimills that produce reinforcing bar (rebar), angles, flats and rounds. Its Americas Fabrication segment consists of its steel fabrication facilities that bend, weld, cut and fabricate steel, primarily rebar. Its International Mill segment consists of its mill, recycling and fabrication operations located in Poland. Its International Marketing and Distribution segment includes international operations for the sales, distribution and processing of primary and secondary metals, fabricated metals, semi-finished, long and flat steel products, and other industrial products.
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