Why Cleveland-Cliffs stock is drawing fresh attention

A recent mix of a strong first quarter report, an 80 day moving average crossover and rising short interest has put Cleveland-Cliffs (CLF) back on investors’ radar as trading activity picks up.

That technical upswing and upbeat first quarter arrive after a mixed stretch, with a 22.27% 1 month share price return and a 48.95% 1 year total shareholder return set against weaker longer term total returns.

If this kind of momentum story has your attention, it can be useful to compare it with other materials names and check out 8 top copper producer stocks

With Cleveland-Cliffs trading close to the average analyst price target, and posting mixed multi year returns alongside recent momentum and strong annual net income growth, is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 20% Undervalued

Cleveland-Cliffs' most followed narrative pegs fair value at about $10.67 per share, almost exactly in line with the recent close near $10.65. This tightens the focus on what is driving that estimate.

Strategic footprint optimization, internal coke and feedstock integration, and direct moves to lower fixed costs and SG&A have already resulted in unit cost reductions. Ongoing initiatives are expected to deliver further cost savings, driving enhanced free cash flow, lower leverage, and a structurally higher earnings profile through improved operating margins.

The fair value story here leans heavily on a sharp swing from current losses to positive earnings, underpinned by steady revenue growth and higher margins that are closer to premium steel producers than current results suggest.

Result: Fair Value of $10.67 (UNDERVALUED)

However, that fair value story still leans on tariff protection and a coal intensive blast furnace footprint. As a result, weaker trade support or tougher decarbonization rules could quickly challenge it.

Another View: Cash Flows Point the Other Way

While the narrative driven fair value lands close to the current $10.65 share price, the SWS DCF model points in a different direction. Based on projected future cash flows, it suggests a value of about $6.18 per share, which frames Cleveland-Cliffs as overvalued on this measure. Which valuation lens do you trust more for your own work?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cleveland-Cliffs for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals across valuation models and sentiment, are you leaning bullish or cautious on Cleveland-Cliffs, and how quickly will you firm up your stance? To see how the bull and bear arguments balance out, take a close look at the 2 key rewards and 3 important warning signs.

Ready to scout your next ideas?

If Cleveland-Cliffs has sharpened your focus, do not stop here. Broader research across other stocks can help you stress test your thesis and spot fresh angles.

• Target potential mispricings by scanning 51 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect their underlying strength.
• Prioritise resilience first by checking 72 resilient stocks with low risk scores that score well on financial stability, so sudden shocks are less likely to catch you off guard.
• Hunt for underfollowed stories with the screener containing 23 high quality undiscovered gems that many investors might be overlooking today but could sit on stronger footing than the crowd realises.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.