Investment Thesis
Cleveland-Cliffs is in financial distress with operating losses, negative cash flow (-$325M OCF, -$477M FCF), and insufficient cash reserves ($45M) relative to $7.8B debt obligations. The company cannot cover interest expenses from operations (interest coverage: -1.5x) and faces declining revenues in a cyclical commodity sector.
Strengths
- Maintains working capital management with current ratio of 2.02x for near-term obligations
- Substantial asset base of $20.1B provides operational infrastructure and collateral value
- Continued capital investments of $152M suggest management believes in operational recovery
Risks
- Severe cash flow deterioration: negative operating cash flow of -$325M with unsustainable -$477M free cash flow
- Critical liquidity crisis: only $45M cash against $7.8B long-term debt and negative interest coverage ratio of -1.5x, limiting debt service capacity
- Unprofitable core operations: -4.3% operating margin, -4.8% net margin, and -3% YoY revenue decline in cyclical commodity sector with thin 11.7% gross margins
Key Metrics to Watch
- Operating cash flow trajectory and path to positive free cash flow
- Interest coverage ratio improvement and debt refinancing capability
- Commodity price recovery impact on gross margins and profitability
Financial Metrics
Revenue
4.9B
Net Income
-237.0M
EPS (Diluted)
$-0.42
Free Cash Flow
-477.0M
Total Assets
20.1B
Cash
45.0M
Profitability Ratios
Gross Margin
11.7%
Operating Margin
-4.3%
Net Margin
-4.8%
ROE
-4.1%
ROA
-1.2%
FCF Margin
-9.7%
Balance Sheet & Liquidity
Current Ratio
2.02x
Quick Ratio
0.64x
Debt/Equity
1.33x
Debt/Assets
70.1%
Interest Coverage
-1.51x
Long-term Debt
7.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T13:07:18.027848 |
Data as of: 2026-03-31 |
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