Cleveland-Cliffs: 2027 Could Be A Very Big Year

Cleveland-Cliffs is North America's largest flat-rolled steel producer, trading at a discount despite recent EBITDA growth and strong automotive contracts. CLF's upside case hinges on contract resets and undisclosed Stelco earnings, but consensus may overstate 2027 FCF by crediting unproven contributions. Management prioritizes deleveraging over capital returns, with buybacks on hold and all free cash flow directed to reducing leverage below 2.5x. I see CLF as a buy at $11, not at $15, given risks from leverage, forward steel prices, and lack of immediate shareholder returns.

Cleveland-Cliffs' ( CLF ) net debt is $7.6 billion while its equity is only $6.3 billion, equivalent to about $11/share, which means that the shareholders own less than half of the company and have to take on all the fluctuations