Why Cleveland-Cliffs Rallied Today

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

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

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

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