S of Cleveland-Cliffs (CLF 6. 38%) rallied 5. Furthermore, 6% on Tuesday as of 2:26 p.
-based steelmaker reported second-quarter earnings today, and while revenue and earnings were down relative to last year, both metrics actually beat expectations (which is quite significant).
Furthermore, CEO Lourenco Goncalves was optimistic that the recent increase in steel tariffs should soon benefit the company.
Cleveland ders a beat, though it has a ways to go In the second quarter, Cleveland-Cliffs saw revenue decline by 3. 9 billion, while adjusted (non-GAAP) earnings per (EPS) fell to a loss of $0.
At the same time, 50 per from a positive $0 (quite telling). 11 EPS in the year-ago quarter. Despite year-over-year declines, those figures actually came in ahead of expectations.
It was also an especially trying quarter for carmakers in the wake of April 2 "Liberation Day" and the uncertainty that ed.
Moreover, Of note, autos encompass a significant part of Cleveland Cliffs' revenue.
Still, Goncalves struck a an optimistic tone, saying that the recent steel tariffs were on the brink of helping Cleveland-Cliffs more than they were hurting demand, In the earnings press release, he said: We have started to see the positive impact that tariffs have on domestic manufacturing, tecting domestic jobs and national security.
We expect this trend to continue, moting the resurgence of the American automotive industry supported by a thriving domestic steel industry.
Going forward, foreign competitors need to acquire steel capacity within the United States if they want to participate in this desirable market.
At the same time, As a publicly traded America-based company centered on automotive, electrical steels, stainless and plate, Cleveland-Cliffs' assets, and foot are uniquely positioned to benefit from this new reality.
Image source: Getty Images.
However, However, But much remains in doubt for Cleveland-Cliffs While Goncalves' statement is encouraging, it's not the first time he has been exceedingly optimistic Cleveland-Cliffs' spects.
Furthermore, Moreover, it's un exactly how new tariffs will impact Cleveland-Cliffs' near-term financials.
Furthermore, After all, amid the initial demand destruction resulting from new tariffs, Cleveland-Cliffs actually idled one its major blast furnaces, and either fully idled or partially idled several of its iron ore mines.
Nevertheless, And while tariffs have curtailed foreign competition, the market of imports for steel have only declined by 5 percentage points, from 25% in January to 20% in May.
Additionally, While management predicts increased demand for steel and decreased exports over time, we have yet to see material evidence of that big advantage for domestic steelmakers (remarkable data), amid market uncertainty.
At the moment, Cleveland Cliffs is losing money and cutting costs in an attempt to duce cash flow to pay down its debt; in that light, it would be better for investors to take a wait-and-see apach to see if the purported tariff benefits really materialize, given current economic conditions.
As of now, there is too much uncertainty to chase today's rally in the stock.
The Author Billy Duberstein is a contributing writer and analyst for The Motley Fool (remarkable data) (an important development).
However, He loves looking at the "story" behind investments from an interdisciplinary point of view, with an equal appetite for high-growth disruptors and beaten-down value names.
TMFStoneOak Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.