Investing

Earnings Previews: American Airlines, AT&T, Cleveland-Cliffs, Freeport-McMoRan

Cleveland-Cliffs

Iron ore miner and steelmaker Cleveland-Cliffs Inc. (NYSE: CLF) has seen its share price soar by 245% over the past 12 months. In mid-June, the stock posted a new 52-week high, and the stock has a year-to-date gain of around 35%. The company’s steel production acquisitions have positioned it well to take advantage of the so-called steel supercycle. The stock also has generated significant interest from retail investors who follow Reddit’s WallStreetBets subgroup.

Coverage of the stock is fairly light, with just eight analysts surveyed. Four rate the shares a Hold and the other four are evenly split between Buy and Strong Buy ratings. At a price of around $19.70, the upside potential based on a median price target of $27 is 37%. At the high target of $39, upside potential reaches 98%.

Second-quarter revenue is forecast to reach $4.95 billion, up 22% sequentially and up 350% year over year. Adjusted EPS is forecast to come in at $1.51, or 400% sequentially and miles better than a per-share loss of $0.46 in the same quarter last year. For the full year, EPS is forecast at $5.55 compared with a per-share loss of $0.47 in 2020.

Cleveland-Cliffs stock trades at a multiple of 3.6 times expected 2021 EPS, 6.1 times estimated 2022 earnings and 10.5 times estimated 2023 earnings. The stock’s 52-week range is $5.16 to $24.77. The company does not pay a dividend.

Freeport-McMoRan

Copper and gold miner Freeport-McMoRan Inc. (NYSE: FCX) has posted a share price gain of 145% over the past 12 months. The year-to-date gain has been a more modest 28%, even though shares were once up more than 70%. When copper prices peaked at around $4.80 a pound in early May, so did Freeport’s share price. Since then the trend has been down, although copper prices have steadied in the past months to trade in a narrow band around $4.30 a pound.

Of 17 analysts covering the stock, 11 rate the shares a Buy or Strong Buy and another five rate the stock a Hold. At a price of around $33.30, the stock’s upside potential is 20% based on a median price target of $43. At the high price target of $60, the upside potential is 80%.

Analysts have forecast second-quarter revenue at $5.81 billion, a jump of 90% year over year and about 20% sequentially. Adjusted EPS is tabbed at $0.75, up by almost 50% sequentially and 2,400% year over ($0.03 in the year-ago-quarter). For the full year, analysts currently forecast EPS at $2.95, up almost 450% year over year, on revenue of $22.17 billion, up 56%.

Freeport’s stock currently trades at a multiple of 11.2 times expected 2021 EPS, 10.0 times estimated 2022 earnings and 11.7 times estimated 2023 earnings. The stock’s 52-week range is $12.44 to $46.10. The company pays an annual dividend of $0.30 (yield of 0.93%).

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