Cliffs Natural Resources (NYSE: CLF) and POSCO (NYSE:PKX) are both mid-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, valuation and dividends.
Insider & Institutional Ownership
65.2% of Cliffs Natural Resources shares are held by institutional investors. Comparatively, 6.0% of POSCO shares are held by institutional investors. 0.5% of Cliffs Natural Resources shares are held by company insiders. Comparatively, 0.0% of POSCO shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Risk & Volatility
Cliffs Natural Resources has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, POSCO has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.
This is a summary of current ratings and target prices for Cliffs Natural Resources and POSCO, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cliffs Natural Resources||3||2||4||0||2.11|
Cliffs Natural Resources presently has a consensus target price of $8.29, suggesting a potential upside of 11.97%. Given Cliffs Natural Resources’ higher probable upside, equities research analysts plainly believe Cliffs Natural Resources is more favorable than POSCO.
This table compares Cliffs Natural Resources and POSCO’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cliffs Natural Resources||2.44%||-13.83%||7.41%|
Earnings & Valuation
This table compares Cliffs Natural Resources and POSCO’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cliffs Natural Resources||$2.34 billion||0.94||$480.50 million||$0.22||33.64|
|POSCO||$49.63 billion||0.47||$5.95 billion||$4.97||14.60|
POSCO has higher revenue and earnings than Cliffs Natural Resources. POSCO is trading at a lower price-to-earnings ratio than Cliffs Natural Resources, indicating that it is currently the more affordable of the two stocks.
POSCO pays an annual dividend of $0.55 per share and has a dividend yield of 0.8%. Cliffs Natural Resources does not pay a dividend. POSCO pays out 11.1% of its earnings in the form of a dividend.
About Cliffs Natural Resources
Cliffs Natural Resources Inc. is a mining and natural resources company. The Company is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. The Company’s segments include U.S. Iron Ore and Asia Pacific Iron Ore. The Company is a producer of iron ore pellets, primarily selling production from U.S. Iron Ore to integrated steel companies in the United States, Canada and Mexico. Its Asia Pacific Iron Ore operations are located in Western Australia and consist of its Koolyanobbing operation. The Koolyanobbing operations serve the Asian iron ore markets with direct-shipped fines and lump ore. In addition, the Company operates an iron ore mining complex in Western Australia. In the United States, the Company owned four operational iron ore mines and one indefinitely idled mine, as of December 31, 2016. As of December 31, 2016, it operated four iron ore mines located in Michigan and Minnesota.
POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.
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