Intrinsic value of Cliffs Natural Resources - CLF

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$6.14

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$6.14

 
Intrinsic value

$23.73

 
Up/down potential

+286%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CLF stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.77
  51.00
  46.40
  42.26
  38.53
  35.18
  32.16
  29.45
  27.00
  24.80
  22.82
  21.04
  19.44
  17.99
  16.69
  15.52
  14.47
  13.52
  12.67
  11.90
  11.21
  10.59
  10.03
  9.53
  9.08
  8.67
  8.30
  7.97
  7.67
  7.41
  7.17
Revenue, $m
  2,109
  3,185
  4,662
  6,633
  9,188
  12,421
  16,416
  21,249
  26,987
  33,680
  41,367
  50,070
  59,801
  70,560
  82,338
  95,120
  108,885
  123,610
  139,274
  155,853
  173,331
  191,691
  210,924
  231,025
  251,995
  273,841
  296,576
  320,219
  344,795
  370,336
  396,877
Variable operating expenses, $m
 
  2,325
  3,403
  4,842
  6,707
  9,067
  11,983
  15,512
  19,701
  24,587
  30,198
  36,551
  43,655
  51,509
  60,107
  69,438
  79,486
  90,236
  101,670
  113,773
  126,531
  139,934
  153,974
  168,648
  183,956
  199,904
  216,500
  233,760
  251,701
  270,345
  289,720
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,702
  2,325
  3,403
  4,842
  6,707
  9,067
  11,983
  15,512
  19,701
  24,587
  30,198
  36,551
  43,655
  51,509
  60,107
  69,438
  79,486
  90,236
  101,670
  113,773
  126,531
  139,934
  153,974
  168,648
  183,956
  199,904
  216,500
  233,760
  251,701
  270,345
  289,720
Operating income, $m
  407
  860
  1,259
  1,791
  2,481
  3,354
  4,432
  5,737
  7,287
  9,094
  11,169
  13,519
  16,146
  19,051
  22,231
  25,682
  29,399
  33,375
  37,604
  42,080
  46,799
  51,757
  56,949
  62,377
  68,039
  73,937
  80,075
  86,459
  93,095
  99,991
  107,157
EBITDA, $m
  522
  1,028
  1,506
  2,142
  2,967
  4,011
  5,301
  6,862
  8,715
  10,876
  13,358
  16,169
  19,311
  22,786
  26,590
  30,717
  35,162
  39,917
  44,976
  50,330
  55,974
  61,903
  68,113
  74,605
  81,376
  88,431
  95,773
  103,408
  111,345
  119,592
  128,163
Interest expense (income), $m
  184
  165
  70
  145
  245
  375
  540
  743
  989
  1,281
  1,622
  2,013
  2,456
  2,951
  3,499
  4,098
  4,749
  5,449
  6,199
  6,996
  7,840
  8,729
  9,664
  10,642
  11,665
  12,733
  13,844
  15,001
  16,205
  17,455
  18,755
Earnings before tax, $m
  207
  695
  1,189
  1,646
  2,235
  2,978
  3,892
  4,994
  6,297
  7,812
  9,547
  11,506
  13,690
  16,100
  18,733
  21,584
  24,650
  27,926
  31,405
  35,085
  38,960
  43,027
  47,286
  51,734
  56,373
  61,204
  66,231
  71,458
  76,890
  82,535
  88,401
Tax expense, $m
  -12
  188
  321
  444
  604
  804
  1,051
  1,348
  1,700
  2,109
  2,578
  3,107
  3,696
  4,347
  5,058
  5,828
  6,656
  7,540
  8,479
  9,473
  10,519
  11,617
  12,767
  13,968
  15,221
  16,525
  17,882
  19,294
  20,760
  22,285
  23,868
Net income, $m
  174
  507
  868
  1,201
  1,632
  2,174
  2,841
  3,646
  4,597
  5,703
  6,969
  8,399
  9,994
  11,753
  13,675
  15,756
  17,995
  20,386
  22,926
  25,612
  28,441
  31,410
  34,519
  37,766
  41,152
  44,679
  48,349
  52,164
  56,130
  60,251
  64,533

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  355
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,924
  2,369
  3,469
  4,935
  6,837
  9,242
  12,214
  15,811
  20,080
  25,060
  30,779
  37,254
  44,495
  52,500
  61,264
  70,774
  81,016
  91,972
  103,626
  115,962
  128,966
  142,627
  156,937
  171,893
  187,496
  203,750
  220,666
  238,258
  256,544
  275,547
  295,295
Adjusted assets (=assets-cash), $m
  1,569
  2,369
  3,469
  4,935
  6,837
  9,242
  12,214
  15,811
  20,080
  25,060
  30,779
  37,254
  44,495
  52,500
  61,264
  70,774
  81,016
  91,972
  103,626
  115,962
  128,966
  142,627
  156,937
  171,893
  187,496
  203,750
  220,666
  238,258
  256,544
  275,547
  295,295
Revenue / Adjusted assets
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
Average production assets, $m
  1,105
  1,669
  2,443
  3,475
  4,815
  6,508
  8,602
  11,135
  14,141
  17,648
  21,676
  26,237
  31,336
  36,974
  43,145
  49,843
  57,056
  64,772
  72,979
  81,667
  90,825
  100,446
  110,524
  121,057
  132,045
  143,492
  155,406
  167,795
  180,673
  194,056
  207,963
Working capital, $m
  434
  118
  173
  245
  340
  460
  607
  786
  999
  1,246
  1,531
  1,853
  2,213
  2,611
  3,047
  3,519
  4,029
  4,574
  5,153
  5,767
  6,413
  7,093
  7,804
  8,548
  9,324
  10,132
  10,973
  11,848
  12,757
  13,702
  14,684
Total debt, $m
  2,175
  920
  1,909
  3,228
  4,940
  7,104
  9,780
  13,016
  16,859
  21,341
  26,488
  32,316
  38,832
  46,037
  53,924
  62,484
  71,701
  81,562
  92,051
  103,153
  114,857
  127,151
  140,030
  153,491
  167,533
  182,162
  197,387
  213,219
  229,677
  246,780
  264,553
Total liabilities, $m
  3,388
  2,133
  3,122
  4,441
  6,153
  8,317
  10,993
  14,229
  18,072
  22,554
  27,701
  33,529
  40,045
  47,250
  55,137
  63,697
  72,914
  82,775
  93,264
  104,366
  116,070
  128,364
  141,243
  154,704
  168,746
  183,375
  198,600
  214,432
  230,890
  247,993
  265,766
Total equity, $m
  -1,464
  237
  347
  493
  684
  924
  1,221
  1,581
  2,008
  2,506
  3,078
  3,725
  4,449
  5,250
  6,126
  7,077
  8,102
  9,197
  10,363
  11,596
  12,897
  14,263
  15,694
  17,189
  18,750
  20,375
  22,067
  23,826
  25,654
  27,555
  29,530
Total liabilities and equity, $m
  1,924
  2,370
  3,469
  4,934
  6,837
  9,241
  12,214
  15,810
  20,080
  25,060
  30,779
  37,254
  44,494
  52,500
  61,263
  70,774
  81,016
  91,972
  103,627
  115,962
  128,967
  142,627
  156,937
  171,893
  187,496
  203,750
  220,667
  238,258
  256,544
  275,548
  295,296
Debt-to-equity ratio
  -1.486
  3.880
  5.500
  6.540
  7.230
  7.690
  8.010
  8.230
  8.400
  8.520
  8.610
  8.670
  8.730
  8.770
  8.800
  8.830
  8.850
  8.870
  8.880
  8.900
  8.910
  8.910
  8.920
  8.930
  8.940
  8.940
  8.950
  8.950
  8.950
  8.960
  8.960
Adjusted equity ratio
  -1.159
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  174
  507
  868
  1,201
  1,632
  2,174
  2,841
  3,646
  4,597
  5,703
  6,969
  8,399
  9,994
  11,753
  13,675
  15,756
  17,995
  20,386
  22,926
  25,612
  28,441
  31,410
  34,519
  37,766
  41,152
  44,679
  48,349
  52,164
  56,130
  60,251
  64,533
Depreciation, amort., depletion, $m
  115
  169
  247
  351
  486
  657
  869
  1,125
  1,428
  1,783
  2,190
  2,650
  3,165
  3,735
  4,358
  5,035
  5,763
  6,543
  7,372
  8,249
  9,174
  10,146
  11,164
  12,228
  13,338
  14,494
  15,698
  16,949
  18,250
  19,602
  21,006
Funds from operations, $m
  410
  676
  1,115
  1,552
  2,118
  2,831
  3,710
  4,770
  6,025
  7,486
  9,159
  11,049
  13,159
  15,488
  18,033
  20,791
  23,758
  26,928
  30,297
  33,861
  37,615
  41,556
  45,683
  49,994
  54,490
  59,173
  64,046
  69,113
  74,380
  79,852
  85,539
Change in working capital, $m
  107
  40
  55
  73
  95
  120
  148
  179
  212
  248
  284
  322
  360
  398
  436
  473
  509
  545
  580
  613
  647
  679
  712
  744
  776
  808
  841
  875
  909
  945
  982
Cash from operations, $m
  303
  623
  1,060
  1,480
  2,024
  2,712
  3,562
  4,592
  5,813
  7,238
  8,874
  10,727
  12,799
  15,090
  17,597
  20,318
  23,249
  26,383
  29,718
  33,247
  36,968
  40,877
  44,971
  49,250
  53,714
  58,365
  63,205
  68,238
  73,470
  78,907
  84,557
Maintenance CAPEX, $m
  0
  -112
  -169
  -247
  -351
  -486
  -657
  -869
  -1,125
  -1,428
  -1,783
  -2,190
  -2,650
  -3,165
  -3,735
  -4,358
  -5,035
  -5,763
  -6,543
  -7,372
  -8,249
  -9,174
  -10,146
  -11,164
  -12,228
  -13,338
  -14,494
  -15,698
  -16,949
  -18,250
  -19,602
New CAPEX, $m
  -69
  -564
  -774
  -1,032
  -1,339
  -1,694
  -2,093
  -2,533
  -3,007
  -3,507
  -4,028
  -4,560
  -5,099
  -5,638
  -6,172
  -6,698
  -7,213
  -7,716
  -8,208
  -8,688
  -9,158
  -9,621
  -10,078
  -10,533
  -10,988
  -11,447
  -11,913
  -12,389
  -12,878
  -13,383
  -13,907
Cash from investing activities, $m
  -58
  -676
  -943
  -1,279
  -1,690
  -2,180
  -2,750
  -3,402
  -4,132
  -4,935
  -5,811
  -6,750
  -7,749
  -8,803
  -9,907
  -11,056
  -12,248
  -13,479
  -14,751
  -16,060
  -17,407
  -18,795
  -20,224
  -21,697
  -23,216
  -24,785
  -26,407
  -28,087
  -29,827
  -31,633
  -33,509
Free cash flow, $m
  245
  -53
  117
  200
  333
  532
  812
  1,190
  1,682
  2,302
  3,064
  3,977
  5,050
  6,287
  7,691
  9,262
  11,001
  12,904
  14,968
  17,188
  19,561
  22,082
  24,747
  27,553
  30,498
  33,580
  36,798
  40,152
  43,643
  47,274
  51,048
Issuance/(repayment) of debt, $m
  -401
  -1,255
  989
  1,319
  1,711
  2,165
  2,675
  3,237
  3,842
  4,482
  5,147
  5,828
  6,516
  7,205
  7,887
  8,559
  9,218
  9,861
  10,489
  11,102
  11,704
  12,295
  12,879
  13,460
  14,042
  14,629
  15,224
  15,833
  16,457
  17,103
  17,773
Issuance/(repurchase) of shares, $m
  287
  3,009
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -206
  1,754
  989
  1,319
  1,711
  2,165
  2,675
  3,237
  3,842
  4,482
  5,147
  5,828
  6,516
  7,205
  7,887
  8,559
  9,218
  9,861
  10,489
  11,102
  11,704
  12,295
  12,879
  13,460
  14,042
  14,629
  15,224
  15,833
  16,457
  17,103
  17,773
Total cash flow (excl. dividends), $m
  38
  -1,308
  1,107
  1,520
  2,045
  2,696
  3,487
  4,427
  5,524
  6,784
  8,211
  9,805
  11,566
  13,491
  15,578
  17,822
  20,219
  22,765
  25,457
  28,291
  31,264
  34,376
  37,626
  41,014
  44,541
  48,209
  52,022
  55,984
  60,101
  64,377
  68,821
Retained Cash Flow (-), $m
  -517
  -2,056
  -110
  -147
  -190
  -241
  -297
  -360
  -427
  -498
  -572
  -648
  -724
  -801
  -876
  -951
  -1,024
  -1,096
  -1,165
  -1,234
  -1,300
  -1,366
  -1,431
  -1,496
  -1,560
  -1,625
  -1,692
  -1,759
  -1,829
  -1,900
  -1,975
Prev. year cash balance distribution, $m
 
  355
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  997
  1,373
  1,855
  2,456
  3,190
  4,067
  5,097
  6,286
  7,639
  9,158
  10,842
  12,691
  14,701
  16,871
  19,194
  21,669
  24,291
  27,057
  29,964
  33,010
  36,195
  39,518
  42,980
  46,583
  50,330
  54,225
  58,272
  62,477
  66,847
Discount rate, %
 
  14.50
  15.23
  15.99
  16.79
  17.62
  18.51
  19.43
  20.40
  21.42
  22.49
  23.62
  24.80
  26.04
  27.34
  28.71
  30.14
  31.65
  33.23
  34.90
  36.64
  38.47
  40.40
  42.42
  44.54
  46.76
  49.10
  51.56
  54.14
  56.84
  59.68
PV of cash for distribution, $m
 
  0
  751
  880
  997
  1,091
  1,152
  1,173
  1,154
  1,096
  1,004
  889
  760
  626
  499
  383
  283
  202
  139
  92
  58
  35
  21
  12
  6
  3
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Cliffs Natural Resources Inc., a mining and natural resources company, produces and supplies iron ore. The company operates four iron ore mines in Michigan and Minnesota; and Koolyanobbing iron ore mining complex located in Western Australia. It sells its products to integrated steel companies and steel producers in the United States and the Asia Pacific. The company was formerly known as Cleveland-Cliffs Inc. Cliffs Natural Resources Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.

FINANCIAL RATIOS  of  Cliffs Natural Resources (CLF)

Valuation Ratios
P/E Ratio 8.2
Price to Sales 0.7
Price to Book -1
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 6.1
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.8%
Cap. Spend. - 3 Yr. Gr. Rate -39.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity -148.6%
Total Debt to Equity -148.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 18.2%
Ret/ On Assets - 3 Yr. Avg. -34.3%
Return On Total Capital 24.4%
Ret/ On T. Cap. - 3 Yr. Avg. -61.3%
Return On Equity -10.1%
Return On Equity - 3 Yr. Avg. -92.5%
Asset Turnover 1
Profitability Ratios
Gross Margin 18.4%
Gross Margin - 3 Yr. Avg. 18.8%
EBITDA Margin 24%
EBITDA Margin - 3 Yr. Avg. 25%
Operating Margin 19.3%
Oper. Margin - 3 Yr. Avg. 16.9%
Pre-Tax Margin 9.8%
Pre-Tax Margin - 3 Yr. Avg. 8.3%
Net Profit Margin 8.3%
Net Profit Margin - 3 Yr. Avg. -81%
Effective Tax Rate -5.8%
Eff/ Tax Rate - 3 Yr. Avg. 159.4%
Payout Ratio 0%

CLF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLF stock intrinsic value calculation we used $2109 million for the last fiscal year's total revenue generated by Cliffs Natural Resources. The default revenue input number comes from 2016 income statement of Cliffs Natural Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CLF stock valuation model: a) initial revenue growth rate of 51% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14.5%, whose default value for CLF is calculated based on our internal credit rating of Cliffs Natural Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cliffs Natural Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CLF stock the variable cost ratio is equal to 73%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CLF stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.6% for Cliffs Natural Resources.

Corporate tax rate of 27% is the nominal tax rate for Cliffs Natural Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CLF stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CLF are equal to 52.4%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Cliffs Natural Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CLF is equal to 3.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-1464 million for Cliffs Natural Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 280.449 million for Cliffs Natural Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cliffs Natural Resources at the current share price and the inputted number of shares is $1.7 billion.


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COMPANY NEWS

▶ Understanding Chinas Monthly Record in Steel Production   [May-26-17 07:36AM  Market Realist]
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▶ Analysts on Iron Ore: How Much More Downside?   [07:37AM  Market Realist]
▶ Where Will Iron Ores Price Slide Stop?   [May-23-17 05:56PM  Market Realist]
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▶ Why Scrap Prices Could Haunt Nucor   [May-19-17 10:36AM  Market Realist]
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▶ Can Trumps Probe into US Steel Imports Stem Them Further?   [May-09-17 04:37PM  Market Realist]
▶ Weekly CEO Buys Highlight   [May-08-17 01:40PM  GuruFocus.com]
▶ The Ore-Mining Cycle Steers Through Another Hazy Turn In China   [May-05-17 11:46AM  Investor's Business Daily]
▶ Why Iron Ore Stocks Are Attractive Shorts   [03:36AM  Barrons.com]
▶ Cliffs CEO on U.S. Infrastructure and Iron Ore Market   [May-01-17 01:58PM  Bloomberg]
▶ Heres Why U.S. Steel Is on a Losing Spree   [07:37AM  Market Realist]
▶ Cliffs reports 1Q loss   [08:10AM  Associated Press]
▶ AK Steels 1Q17 Earnings: What You Need to Know   [Apr-26-17 02:35PM  Market Realist]
▶ What Factors Could Drive CLFs Free Cash Flow Going Forward?   [Apr-24-17 10:36AM  Market Realist]
▶ 3 Top Infrastructure Stocks to Buy in 2017   [Apr-22-17 11:19AM  Motley Fool]
▶ Could There Be a Downside ahead for CLFs Revenues?   [Apr-21-17 10:36AM  Market Realist]
▶ What Sent Iron Ore Prices into a Free Fall?   [04:54PM  Market Realist]
▶ Is Cliffs Natural Resources Now a Buy?   [03:42PM  Motley Fool]
▶ U.S. Steels 1Q17: Will It See an Earnings Beat This Quarter?   [Apr-18-17 06:05PM  Market Realist]
▶ Heres Why Nucors Profits Are Expected to Surge in 1Q17   [Apr-14-17 10:36AM  Market Realist]
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▶ Cliffs: Understanding Analyst Recommendations   [07:36AM  Market Realist]
▶ How Iron Ore Demand Is Shaping Up for Cliffs   [Apr-12-17 09:06AM  Market Realist]
▶ [$$] Bidding War Over Mesabi Metallics Iron Range Ore Facility   [Apr-11-17 11:20AM  The Wall Street Journal]
Stock chart of CLF Financial statements of CLF Annual reports of CLF
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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