Contrasting Cliffs Natural Resources (CLF) and Synalloy Corporation (SYNL)
Cliffs Natural Resources (NYSE: CLF) and Synalloy Corporation (NASDAQ:SYNL) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.
This table compares Cliffs Natural Resources and Synalloy Corporation’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%|
Institutional and Insider Ownership
58.3% of Cliffs Natural Resources shares are held by institutional investors. Comparatively, 47.6% of Synalloy Corporation shares are held by institutional investors. 0.5% of Cliffs Natural Resources shares are held by insiders. Comparatively, 10.6% of Synalloy Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This is a summary of current ratings and target prices for Cliffs Natural Resources and Synalloy Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cliffs Natural Resources||3||2||3||0||2.00|
Cliffs Natural Resources presently has a consensus price target of $8.00, indicating a potential upside of 12.20%. Given Cliffs Natural Resources’ higher probable upside, analysts clearly believe Cliffs Natural Resources is more favorable than Synalloy Corporation.
Earnings and Valuation
This table compares Cliffs Natural Resources and Synalloy Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cliffs Natural Resources||$2.34 billion||0.90||$480.50 million||$0.22||32.41|
|Synalloy Corporation||$161.06 million||0.63||$7.35 million||($0.29)||-40.00|
Cliffs Natural Resources has higher revenue and earnings than Synalloy Corporation. Synalloy Corporation 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.
Volatility and Risk
Cliffs Natural Resources has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500. Comparatively, Synalloy Corporation has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500.
Cliffs Natural Resources beats Synalloy Corporation on 10 of the 12 factors compared between the two stocks.
About Cliffs Natural Resources
Cleveland-Cliffs Inc, formerly 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.
About Synalloy Corporation
Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company’s Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company’s Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company’s Specialty Chemicals segment consists of the Company’s subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.
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