Cliffs Natural Resources (CLF) versus Olympic Steel (ZEUS) Financial Review
Cliffs Natural Resources (NYSE: CLF) and Olympic Steel (NASDAQ:ZEUS) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.
This table compares Cliffs Natural Resources and Olympic Steel’s 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%|
Earnings & Valuation
This table compares Cliffs Natural Resources and Olympic Steel’s 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||0.91||$480.50 million||$0.22||32.68|
|Olympic Steel||$1.21 billion||0.16||$36.12 million||$0.75||22.84|
Cliffs Natural Resources has higher revenue and earnings than Olympic Steel. Olympic Steel 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.
Insider and Institutional Ownership
66.6% of Cliffs Natural Resources shares are owned by institutional investors. Comparatively, 69.7% of Olympic Steel shares are owned by institutional investors. 0.5% of Cliffs Natural Resources shares are owned by company insiders. Comparatively, 18.3% of Olympic Steel shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Volatility and Risk
Cliffs Natural Resources has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500.
Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. Cliffs Natural Resources does not pay a dividend. Olympic Steel pays out 10.7% of its earnings in the form of a dividend.
This is a summary of recent ratings and recommmendations for Cliffs Natural Resources and Olympic Steel, as provided by MarketBeat.
|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 target price of $8.29, suggesting a potential upside of 15.24%. Olympic Steel has a consensus target price of $22.33, suggesting a potential upside of 30.38%. Given Olympic Steel’s stronger consensus rating and higher possible upside, analysts plainly believe Olympic Steel is more favorable than Cliffs Natural Resources.
Olympic Steel 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 Olympic Steel
Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.
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