Critical Comparison: Cliffs Natural Resources (CLF) versus United States Steel Corporation (NYSE:X)

Cliffs Natural Resources (NYSE: CLF) and United States Steel Corporation (NYSE:X) are both mid-cap basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitabiliy, institutional ownership, analyst recommendations, valuation and risk.

Valuation & Earnings

This table compares Cliffs Natural Resources and United States Steel Corporation’s top-line revenue, earnings per share (EPS) 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
United States Steel Corporation $11.21 billion 0.37 $838.00 million $0.16 149.00

United States Steel Corporation has higher revenue and earnings than Cliffs Natural Resources. Cliffs Natural Resources is trading at a lower price-to-earnings ratio than United States Steel Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Cliffs Natural Resources has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, United States Steel Corporation has a beta of 2.88, suggesting that its share price is 188% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Cliffs Natural Resources and United States Steel Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cliffs Natural Resources 3 2 4 0 2.11
United States Steel Corporation 4 7 7 0 2.17

Cliffs Natural Resources presently has a consensus target price of $8.29, indicating a potential upside of 15.24%. United States Steel Corporation has a consensus target price of $27.03, indicating a potential upside of 13.37%. Given Cliffs Natural Resources’ higher possible upside, analysts clearly believe Cliffs Natural Resources is more favorable than United States Steel Corporation.

Profitability

This table compares Cliffs Natural Resources and United States Steel 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%
United States Steel Corporation 0.24% 6.50% 1.67%

Insider & Institutional Ownership

66.6% of Cliffs Natural Resources shares are owned by institutional investors. Comparatively, 69.1% of United States Steel Corporation shares are owned by institutional investors. 0.5% of Cliffs Natural Resources shares are owned by insiders. Comparatively, 1.0% of United States Steel Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

United States Steel Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Cliffs Natural Resources does not pay a dividend. United States Steel Corporation pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

United States Steel Corporation beats Cliffs Natural Resources on 10 of the 16 factors compared between the two stocks.

Cliffs Natural Resources Company Profile

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.

United States Steel Corporation Company Profile

United States Steel Corporation is an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil.

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