Cleveland-Cliffs (NYSE:CLF) plans to release its earnings on May 7, 2025. According to our estimates, revenues are expected to reach $5.2 billion, while the consensus estimates for earnings forecast a loss of $0.83 per share. This anticipated loss is mainly due to declining steel prices and weaker demand in essential sectors such as automotive and construction. The company is facing challenges from falling U.S. hot-rolled coil (HRC) prices, which have decreased to approximately $665 per ton. This drop, alongside rising inventory levels and shorter lead times, indicates a weakening market environment that could affect Cleveland-Cliffs’ revenue and profitability.
The company currently has a market capitalization of $4.0 billion. Over the past twelve months, it recorded $19 billion in revenue, but was operationally loss-making with operating losses of $504 million and a net income of $754 million in losses. However, if you are looking for upside potential with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and generating returns exceeding 91% since its inception.
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Cleveland-Cliffs’ Historical Chances of Positive Post-Earnings Returns
Here are some insights on one-day (1D) post-earnings returns:
- Over the last five years, there have been 19 recorded earnings data points, with 10 positive and 9 negative one-day (1D) returns noted. Overall, positive 1D returns occurred approximately 53% of the time.
- Interestingly, this percentage rises to 55% when we look at data from the last 3 years instead of the full 5 years.
- The median of the 10 positive returns is 5.7%, whereas the median of the 9 negative returns stands at -7.9%
Additional insights into the 5-Day (5D) and 21-Day (21D) returns following earnings are consolidated along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A comparatively less risky approach (albeit less useful if the correlation is weak) is to examine the correlation between short-term and medium-term returns post-earnings, identify a combination with the highest correlation, and execute the corresponding trade. For instance, if 1D and 5D exhibit the highest correlation, a trader might choose to take a “long” position for the subsequent 5 days if the 1D post-earnings return is positive. Here is some correlation data derived from 5-year and 3-year (more recent) history. Note that the correlation notation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Relationship With Peer Earnings?
At times, the performance of peers can affect the post-earnings stock response. In fact, the pricing impact might begin prior to the earnings announcements. Below is some historical data comparing the post-earnings performance of Cleveland-Cliffs stock against the stock performance of peers that reported earnings just before Cleveland-Cliffs. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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