Cleveland-Cliffs (NYSE: CLF) reported mixed earnings the morning after the Super Bowl. The initial market reaction was bearish, but following the sell-off, the stock may be worth another look with fresh eyes.
Shares of the U.S.-based steelmaker (forgive the play on words) fell off a cliff to the tune of 18.9% in midday trading the day after the report. The results were solid in spots, but weak elsewhere, with a better-than-expected earnings loss being offset by revenue that came in below forecast.
A 6% miss in revenue wasn’t ideal, but it wasn't unexpected, and the company provided investors with several tangible reasons to believe 2026 will be a better year. However, with CLF stock up over 47% in the 12 months heading into earnings, many investors believed the company’s future guidance needed to be stronger.
Setting Up the Opportunity in CLF Stock
The stock now sits at a level that acted as support back in October and as resistance about a year ago. This level aligns with the stock’s 150-day simple moving average (SMA), making this a key support area.
The stock is not oversold yet, but selling action has pushed it below its lower Bollinger band. That suggests oversold conditions could emerge.
A Lot of “Ifs” to Consider
If Cleveland-Cliffs doesn’t meet management's expectations in 2026, it won’t be because of under-promising. Chairman, president, and chief executive officer (CEO), Lourenco Goncalves, painted a bullish picture for investors on the earnings call.
The bull case for CLF stock in 2026 is as follows. As with other basic materials companies, this will be the first full year of 50% steel tariffs, which will likely drive demand for domestic steel. That ties in nicely with the company now having all its assets fully operational, which was not the case in 2025.
The company also cited gains in market share in its key automotive sector. More broadly, Cleveland-Cliffs sees improved manufacturing conditions, including lower coal prices, as a reason for optimism in the current year.
Supporting the bullish outlook, Cleveland-Cliffs expects to ship approximately 16.8 million tons of steel in 2026, a gain of approximately 3% from the 16.2 million tons it shipped in 2025. The company also announced capital expenditures (capex) spending of approximately $700 million, which is consistent with spending in recent years.
Where Analysts Needed to Hear More
In contrast to his broad optimism for the current year, Goncalves was more ambiguous about an update on the company’s strategic partnership with Korean steelmaker POSCO.
Under the terms of the proposed agreement, POSCO could take an equity investment in Cleveland-Cliffs.
It wasn’t that the news was bad, but nothing concrete came from the call. That leaves some investors wondering whether the agreement, expected to close in the first half of 2026, is still on track.
On the other hand, though, the company didn’t tie its initial 2026 outlook to the agreement. It may come down to whether investors believe the company's outlook—not including the POSCO equity investment—is enough to support CLF's stock price going forward.
The Cash Flow Sensitivity Investors May Be Ignoring
One overlooked takeaway from Cleveland-Cliffs’ earnings presentation is how well-positioned the company is. Even modest improvements in steel pricing and capacity utilization could meaningfully improve the firm's earnings. Management emphasized that 2025 results were weighed down by contract pricing lag and underutilized assets. Those factors distort near-term revenue but don’t reflect normalized cash flow potential.
With all facilities now fully operational and automotive contracts resetting through 2026, incremental volume gains could translate disproportionately into free cash flow as fixed costs are absorbed. That dynamic helps explain why management maintained steady CapEx guidance while expressing confidence in improving margins.
In other words, this quarter’s weakness says more about timing than structural demand. For investors focused solely on revenue misses, the market may be discounting the speed with which CLF’s earnings power can recover if pricing and shipments move even slightly in the company’s favor.
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The article "Cleveland-Cliffs Sinks After Earnings—Is the Selloff Overdone?" first appeared on MarketBeat.
