Also, helping push the company higher was the upgrade by FBR Capital Markets, which boosted the company to outperform from market perform and placed a $28 price target on the stock.
However, the company is still down over 40% year-to-date, meaning that it has a long way to go before it can gain investors’ trust. Cliffs Natural Resources Inc (NYSE:CLF) is an international mining and natural resources company, focused on iron ore and metallurgical coal.
What’s more is that Cliffs’ three largest customers (Arcelor, Severstal and Algoma) account for over 30% of product sales and 60% of U.S. iron ore product revenues. One of the big headwinds will be China’s decelerating economy, and Cliffs Natural Resources Inc (NYSE:CLF) expects its global iron ore sales to be relatively flat year-over-year at about 40 million tons for 2013. As a result, the future outlook isn’t too bright for the company, with analysts expecting the company to grow EPS by an annualized 6% over the next five years.
How do the comps stack up?
Vale is a Brazil-based metals and mining company. Vale’s iron ore production fell by 3.5% year over year during 1Q 2013, after various licensing and permits issues. Heavy rainfall in Mozambique also contributed to a decline in the coal shipments in the region, and the mine of Gongo Soco will be shut down in 2013 due to excessive use.
Vale is still down over 20% year-to-date despite posting 1Q EPS that beat the consensus by 17%. As well, at the end of 1Q Vale’s cash on hand was $6 billion, while long-term debt increased to $44 billion. Despite the recent underperformance, analysts expect the company to perform nicely over the longer-term. Analysts have a five-year expected annualized EPS growth rate of 12%, which puts the iron ore company’s PEG ratio at a mere 0.57.
BHP Billiton Limited (NYSE:BHP) is a diversified natural resources company, which has potentially helped the company hold up better than some of its mining peers. The company operates in nine segments: Petroleum, Aluminium, Base Metals, Diamonds and Specialty Products, Stainless Steel Materials, Iron Ore, Manganese, Metallurgical Coal and Energy Coal.
Of all the major iron ore producers, BHP Billiton Limited (NYSE:BHP) currently pays the only dividend that is less than 100% of earnings, with a dividend payout of 61%. This in part, along with a strong backlog of projects, makes BHP the best iron ore producer in the industry. At the end of its fiscal half-year 2013, BHP Billiton Limited (NYSE:BHP) had twenty projects in progress, which are expected to yield revenue by 2015.
