Buy Or Fear Cleveland-Cliffs Stock?
Cleveland-Cliffs (NYSE:CLF) has risen 14% year-to-date, but the stock increasingly looks like a Fear given its weak operating performance and financial condition. Despite strength in metals pricing and improving demand trends, the company’s operational leverage makes it highly exposed to cyclical swings, and even modest pullbacks in steel prices could hit earnings hard.
In Q2 2025, Cleveland-Cliffs reported revenue of $5.8 billion, down 6% year-over-year as realized steel prices softened compared to last year’s highs. Net income slipped to $345 million, a 22% decline, while adjusted EBITDA of $720 million also fell short of prior-year levels. Free cash flow narrowed to $210 million, reflecting both softer pricing and higher input costs. The balance sheet carries $3.9 billion in debt against just $400 million in cash, leaving limited flexibility in a downturn. Steel shipments were flat, with gains in automotive offset by weaker demand from construction and energy end markets, underscoring the company’s cyclical risk profile. Separately, see –ServiceNow Stock To Less Than $450? But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio is designed to reduce stock-specific risk while giving upside exposure.
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[1] Valuation Looks Very Low
Cleveland trades at a steep discount to the market. Its price-to-sales ratio is 0.3, substantially lower than the S&P 500’s 3.3. On earnings, the company is projected to lose money this year and begin to recover next year, but until then the PE will not be very helpful. For more details see: CLF Valuation Ratios
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[2] Growth Is Very Weak
Cleveland’s growth has been in the red. Over the past three years, revenues have fallen at an average annual rate of 7.9% versus 5.3% for the S&P 500. In the last twelve months, sales dropped 12% from $21 billion to $18 billion, and most recently, quarterly revenue dropped 3.1% year-over-year to 4.9 billion. By comparison, the index grew over 6.1%. For more details, see: CLF Revenue Comparison
[3] Profitability Appears Very Weak
Over the past year, Cleveland generated $1.6 billion in operating losses, a -8.6% margin, alongside -$862 million in operating cash flow (-4.7% margin), and -$1.7 billion in net income (-9% margin). Cleveland’s operating, cash flow and net margins are substantially lower than the S&P 500, which stands at 18.8%, 20.2%, and 12.8% respectively for the index. For more details see: CLF Operating Income Comparison
[4] Financial Stability Looks Very Weak
Cleveland carries relatively high debt and a negligible cash balance. Its debt-to-equity ratio is 145.1%, well above the S&P 500 average of 20.2%. Meanwhile, cash makes up only 0.3% of total assets, compared with 7% for the index, giving the company limited flexibility to invest and weather uncertainty.
Looking for Smarter Alternatives?
Cleveland combines very weak growth and limited financial stability along with very low profitability. Even at its low valuation, it makes the stock volatile, and unattractive for investors.
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