Cliffs Natural Swings a Loss in Q4, But Results Top Views; Dividend Slashed 76% (CLF)

After the bell on Tuesday, steel and iron mining company Cliffs Natural Resources Inc (CLF) said it booked a loss in the fourth-quarter mostly attributed to hefty charges and a drop in iron prices. Despite the loss, adjusted earnings and revenue beat Wall Street estimates. Also, the company announced a big cut to its quarterly dividend.

The Cleveland, Ohio-based company swung a loss in the fourth-quarter, posting a $1.63 billion, or $11.36 per share, loss in the period. In the same quarter a year ago, the company made a profit of 185.4 million, or $1.30 per share.

Adjusting for one-time items such as acquisition charges, Cliffs reported a net income of $88.8 million, or 62 cents per share, versus an adjusted net income of $213.2 million, or $1.49 per share, a year earlier.

Revenue for the quarter came in at $1.54 billion, about a 4% drop from $1.60 billion in revenue in the same quarter last year.

According to analysts polled by Thomson Reuters, Cliffs was expected to earn an adjusted 58 cents per share on revenue of $1.53 billion.

The decline in revenue was partially due to a 14% drop in iron ore prices. Also, the company was negativey impacted by a 15% increase in the cost of goods sold and other expenses.

Adding to investors’ concerns, the company announced that it is slashing its quarterly dividend payout fro 62.5 cents per share to 15 cents per share, a 76% decrease. This declared dividend will be paid on March 1 with an ex-dividend date of February 20.

A steep drop in dividend payout is somewhat common among companies working in the commodities industries. These firms tend to have a volatile dividend payout history, so dividend investors should always be cautioned before maintain too firm a position in these stocks.

Mostly caused by the dramatic decrease in dividend, Cliffs shares were down $4.72, or -12.89%, during pre-market trading on Wednesday. The stock is down about -50% over the past year.

The Bottom Line
Shares of Cliffs Natural Resources (CLF) have a dividend yield of 1.64% based on last night’s closing price of $36.61 and the company’s updated annualized dividend payout of 60 cents per share.

Cliffs Natural Resources Inc (CLF) is not recommended at this time, holding a DARS™ Rating of 3.0 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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