Breaking Down Cleveland-Cliffs Inc. (CLF) Financial Health: Key Insights for Investors

You're looking at Cleveland-Cliffs Inc. (CLF) and seeing a mixed signal: a strong operational rebound but a persistent bottom-line challenge. The third quarter of 2025 gave us a clear sign of management's cost-control efforts paying off, with Adjusted EBITDA jumping to $143 million, a 51% sequential increase, driven by better performance in automotive-grade steel. Still, the GAAP net loss for the quarter was $234 million on $4.7 billion in revenue, which tells you the steel market headwinds are defintely real, not just noise. For the full fiscal year 2025, consensus analyst projections map out a revenue of around $18.95 billion, but with an expected adjusted earnings per share (EPS) loss of -$2.42, so we need to look past the headline losses and focus on the balance sheet strength and strategic shifts. The good news is the company maintains a solid liquidity position of $3.1 billion as of September 30, 2025, giving them the capital flexibility to navigate this near-term volatility and execute their long-term plan. Let's break down what these numbers mean for your investment decision and where the real opportunities-and risks-lie.

Revenue Analysis

You're looking at Cleveland-Cliffs Inc. (CLF) because you know steel is a foundational industry, but you need to see where the money is actually coming from right now. The direct takeaway is that while the overall trailing twelve-month (TTM) revenue is down, the shift toward higher-margin, specialized steel-especially for the automotive sector-is driving a richer sales mix and provides a clear path to better profitability.

As of September 30, 2025, Cleveland-Cliffs Inc.'s TTM revenue stood at $18.62 billion, representing a 6.76% decline year-over-year. This dip reflects broader market pressures and the company's strategic decision to idle underperforming assets to optimize its footprint. To be fair, Q3 2025 revenue of $4.7 billion was a slight sequential decrease from Q2's $4.9 billion, but the underlying mix is what matters most for the future.

Primary Revenue Streams: Steel Dominance

Cleveland-Cliffs Inc. is, first and foremost, a steelmaker. The vast majority of its income is derived from its Steelmaking segment. For Q3 2025, Steelmaking revenue accounted for approximately 97.9% of the total quarterly revenue, with the remaining fraction coming from other businesses. This isn't a surprise, but it means you must focus your analysis defintely on the steel market dynamics.

The product mix tells a clear story of what they are selling. In Q3 2025, the sales volume of their steel products was heavily concentrated in flat-rolled products, which is a key indicator of their focus on higher-value applications like automotive. They shipped 4.0 million net tons of steel products in the quarter.

• Hot-rolled steel: 37% of sales volume
• Coated steel: 29% of sales volume
• Cold-rolled steel: 15% of sales volume
• Plate, stainless, electrical, and other products: 19% combined

Market Segment Contribution and Key Changes

The most important shift is the growing and reliable revenue from direct sales to the automotive market. This is high-quality, specialized steel, often secured with multi-year, fixed-price contracts. Here's the quick math on where the Q3 2025 steelmaking revenue of $4.6 billion was sourced:

The 30% contribution from the automotive market is significant and reflects a demand recovery for automotive-grade steel made in the USA. This is a strategic advantage, especially with their extensive coating capacity in North America. Plus, the company is actively shedding low-margin volume; the slab supply contract that kept 1.5 million tons of capacity tied up in low-margin sales expires in December 2025, freeing that capacity for higher-margin finished products starting in 2026. This is a huge, near-term opportunity. For more on the long-term view, you can review their Mission Statement, Vision, & Core Values of Cleveland-Cliffs Inc. (CLF).

What this estimate hides is the impact of the footprint optimization, which involved idling six facilities in Q1/Q2 2025 to cut costs and reposition away from loss-making operations. These actions are expected to yield over $300 million in annual savings, which will improve the bottom line even if the top-line revenue growth remains muted in the near term.

Profitability Metrics

You're looking at Cleveland-Cliffs Inc. (CLF) because you know the steel sector is cyclical, but you need to see if their operational improvements are actually translating to the bottom line. The direct takeaway is that while the company is still reporting a net loss, the trend in the third quarter of 2025 shows a clear, positive inflection point in operational efficiency, largely driven by cost management and a favorable trade environment.

For the third quarter (Q3) of 2025, Cleveland-Cliffs Inc. (CLF) reported a GAAP net loss of $234 million on revenues of $4.7 billion. This translates to negative profitability across the board, which is a near-term risk. But, the real story is the quarter-over-quarter improvement. The Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)-a key measure of operational cash flow-jumped from $97 million in Q2 2025 to $143 million in Q3 2025. That's a $46 million improvement in core operating performance in just three months.

Here's the quick math on the Q3 2025 margins, based on the $4.7 billion revenue:

• Gross Profit Margin: The Gross Profit was a negative $46 million, resulting in a margin of approximately -0.98%.
• Operating Profit Margin: The Operating Profit (EBIT) was a loss of $204 million, yielding a margin of about -4.34%.
• Net Profit Margin: The GAAP Net Loss of $234 million gives a Net Profit Margin of roughly -4.98%.

The company is defintely still losing money, but they are losing less of it, and the operational improvement is real.

What this estimate hides is the one-time nature of some charges. For instance, the Q2 2025 GAAP net loss of $470 million included $323 million in non-recurring charges related to idled facilities. Stripping those out shows the adjusted net loss was only $247 million, which is much closer to the Q3 loss of $223 million. This cost management is a direct result of their footprint optimization initiatives.

When you compare Cleveland-Cliffs Inc. (CLF)'s profitability to the industry, the challenge becomes clear. The median profitability ratios for the U.S. Primary Metal Industries in 2024 were significantly positive, showing a much healthier baseline for competitors.

The gap shows that Cleveland-Cliffs Inc. (CLF) has a long way to go to catch up to the industry median, but the Q3 trend is the key to watch. Management credits the demand recovery for automotive-grade steel-a consequence of the new trade environment and tariffs-for the improved sales mix and better pricing. The steelmaking segment saw 30% of its Q3 revenues, or about $1.4 billion, come from direct sales to the automotive market. That's a strong lever. For a deeper look at who is betting on this turnaround, you should read Exploring Cleveland-Cliffs Inc. (CLF) Investor Profile: Who's Buying and Why?

The opportunity here is simple: if the cost-reduction efforts continue and the favorable pricing environment holds, the negative margins will turn positive quickly. Your action should be to monitor the Q4 2025 earnings report for continued sequential improvement in Adjusted EBITDA and a move toward a positive Gross Margin.

Debt vs. Equity Structure

You need to know how Cleveland-Cliffs Inc. (CLF) is funding its operations, and the quick takeaway is this: the company relies significantly more on debt than its equity base, which is a high-leverage strategy that amplifies both risk and potential return. This is typical for a capital-intensive steel business, but the sheer scale of the debt requires a close look.

As of the third quarter ending September 30, 2025, Cleveland-Cliffs Inc.'s total long-term debt stood at approximately $8.039 billion. When you factor in all liabilities, including short-term obligations like accounts payable, the total liabilities reached $14.583 billion. To finance this, the company's total shareholder equity was around $5.707 billion. This capital mix tells a clear story about financial leverage, or the use of borrowed money to boost returns.

Here's the quick math on the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. Cleveland-Cliffs Inc.'s D/E ratio currently sits at about 1.41. What this estimate hides is the comparative risk: a D/E ratio above 1.0 means the company is primarily financed by creditors, not owners. For perspective, a major competitor, United States Steel, had a D/E ratio of 0.37 as of mid-2025, making Cleveland-Cliffs Inc.'s ratio notably higher.

The company is actively managing this debt load. In September 2025, Cleveland-Cliffs Inc. issued and priced $850 million of Senior Unsecured Guaranteed Notes due in 2034, with a fixed annual interest rate of 7.625%. This was a clear refinancing action, using the proceeds to redeem higher-interest notes that were due in 2027. This move pushes out the maturity wall, giving them more breathing room, but it also commits them to a high long-term interest cost. You can read more about the institutional interest in the company here: Exploring Cleveland-Cliffs Inc. (CLF) Investor Profile: Who's Buying and Why?

The reliance on debt is reflected in the company's credit ratings, which are in the speculative-grade (or 'junk') territory. S&P Global Ratings affirmed an issuer credit rating of 'BB-' in May 2025 but revised the outlook to Negative due to weaker earnings and high leverage, while Moody's has assigned a Ba3 rating to its senior notes. This is defintely a risk factor, as it means borrowing future capital will remain expensive.

The balance between debt and equity is currently tilted heavily toward debt financing, a deliberate choice to fund large-scale steel operations. The risk here is that if steel prices or demand soften, the interest payments on that $8.039 billion debt load could quickly become a major drain on cash flow. Still, the recent refinancing shows management is focused on extending maturities to stabilize the near-term financial picture.

What you need to watch now are the quarterly earnings. The company must generate enough operating cash flow to service its debt and avoid further credit downgrades. The high D/E ratio means any drop in earnings will have an outsized impact on shareholder returns.

Liquidity and Solvency

You need to know if Cleveland-Cliffs Inc. (CLF) can cover its short-term bills, especially in a cyclical industry like steel. The quick answer is: their total liquidity is strong, but their operational cash flow in the near-term shows pressure, which is something we need to watch closely.

Their liquidity position, which is the total cash plus availability under credit facilities, stood at a healthy $3.1 billion as of September 30, 2025. That's a solid buffer. But the underlying ratios tell a more nuanced story about their working capital (current assets minus current liabilities).

Current and Quick Ratios: The Inventory Factor

The two key liquidity ratios-Current and Quick-show a significant reliance on inventory to meet short-term obligations. Here's the quick math:

• Current Ratio: This was around 2.04 for the quarter ending June 2025 (and TTM). A ratio over 1.0 is generally good, meaning current assets cover current liabilities twice over.
• Quick Ratio (Acid-Test Ratio): This dropped to 0.61 for the quarter ended September 2025. This ratio excludes inventory, which is often harder to liquidate quickly in the steel business.

The wide gap between the 2.04 Current Ratio and the 0.61 Quick Ratio is the inventory. It means that if Cleveland-Cliffs Inc. (CLF) had to pay all its current debts right now without selling any steel, they would only have about 61 cents of the most liquid assets for every dollar of liability. This is defintely a point of attention, as inventory can be slow to convert to cash.

Working Capital and Cash Flow Trends

The working capital (Current Assets minus Current Liabilities) itself has been under pressure, with the Net Current Asset Value showing a large negative figure of approximately $-7.89 billion on a Trailing Twelve Months (TTM) basis. This reflects a structural element of the steel industry, but it also highlights the criticality of consistent cash flow from operations to manage this gap.

Looking at the cash flow statement for the quarter ended September 30, 2025, we see the pressure points clearly:

The negative Operating Cash Flow of $443 million in Q3 2025 is a clear risk signal. You want to see positive OCF to fund capital expenditures and debt payments. The company is trying to offset this by reducing its full-year capital expenditures guidance to $525 million, which is a prudent move to conserve cash. Still, a sustained negative OCF is a major liquidity concern that the $3.1 billion in total liquidity will eventually have to absorb.

Near-Term Liquidity Strengths and Concerns

The biggest strength for Cleveland-Cliffs Inc. (CLF) is that large liquidity cushion, plus the fact that the CEO is pointing to a demand recovery in automotive-grade steel, which could improve the sales mix and pricing. The concern, however, is that the Quick Ratio of 0.61 and the negative Q3 2025 Operating Cash Flow of -$443 million show the core business is not generating enough cash right now to cover its short-term liabilities without dipping into that cash buffer or relying on selling off inventory. The total cash and cash equivalents of just $66 million in Q3 2025 is quite low relative to the $8.04 billion in total debt. This means they are relying heavily on their credit facilities for immediate operational flexibility.

For a deeper dive into who is buying the stock despite these challenges, you should check out Exploring Cleveland-Cliffs Inc. (CLF) Investor Profile: Who's Buying and Why?

Action: Monitor the Q4 2025 OCF. It needs to turn positive to alleviate the working capital pressure and reduce reliance on the liquidity cushion.

Valuation Analysis

You are looking at Cleveland-Cliffs Inc. (CLF) and wondering if the market has it right. Honestly, the valuation picture is complicated right now, driven by a period of negative earnings. The quick takeaway is that the consensus of analysts leans toward a Hold, suggesting the current stock price, recently around $10.71 to $11.19 in mid-November 2025, is near its near-term fair value.

When a company is losing money, traditional metrics like the Price-to-Earnings (P/E) ratio become useless. Cleveland-Cliffs Inc. is in this boat, reporting a negative Earnings Per Share (EPS) of approximately $-3.400 for the trailing twelve months (TTM) ended September 2025, which means its P/E ratio is 'At Loss' or negative. This is a clear sign of near-term financial stress, even as the company is executing its footprint optimization initiatives.

Here's the quick math on other key valuation multiples, using data as of November 2025:

• Price-to-Book (P/B) Ratio: The P/B ratio is a modest 0.97. This is a critical number, suggesting the stock trades slightly below its book value (the theoretical liquidation value of its assets minus liabilities). For a heavy industry like steel, trading below book value can signal undervaluation, but you have to check the quality of those assets.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio, which is often better for capital-intensive companies, is highly negative, around -44.92 to -77.96 for the TTM ended September 2025. This is due to a negative TTM Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of approximately $-322 million. A negative multiple is a red flag that requires a deeper dive into the company's operating cash flow and debt structure, which you can find more detail on in Breaking Down Cleveland-Cliffs Inc. (CLF) Financial Health: Key Insights for Investors.

The stock price trend over the last 12 months (LTM) has been volatile, which is typical for a cyclical steel producer. The stock has seen a decrease in price ranging from 3.03% to 7.93% over the LTM leading up to November 2025. Still, the 52-week range shows a significant swing, from a low of $5.63 in May 2025 to a high of $16.70 in October 2025. That's a huge move, and it tells you the market is defintely trying to figure out the long-term value here.

Regarding income, Cleveland-Cliffs Inc. is not currently a dividend-paying stock, so the dividend yield is 0% and the payout ratio is not applicable. For an investor focused on current income, this is a non-starter; this is a pure capital appreciation play right now.

The analyst community is aligned on a Hold rating, reflecting the mixed signals from the negative earnings but reasonable P/B. Out of a recent group of analysts, the breakdown was 3 Buys, 5 Holds, and 2 Sells, which is a textbook definition of an 'Equal Weight' call. The average target price sits around $12.78, with a range from a low of $5.75 to a high of $16.00, suggesting a potential upside of about 15% from the recent price of around $11.00, but with significant disagreement on the long-term outlook.

Next Step: Check the full-year 2025 guidance on cash flow, as a negative EV/EBITDA means you must focus on the balance sheet strength and liquidity to gauge survival risk.

Risk Factors

You need to be a trend-aware realist when looking at a cyclical business like Cleveland-Cliffs Inc. (CLF). While the company is strategically integrated, its financial health in the near-term is exposed to a few major risks, both external and internal, that could derail its operational improvements.

The biggest external risk is the volatile steel market, especially as demand from the non-automotive sectors remains soft. Q3 2025 revenue came in at $4.7 billion, missing the $4.9 billion forecast, a clear sign that weakness in the construction and general manufacturing sectors is pressuring the top line.

External and Market Risks

The steel industry's cyclical nature means commodity price swings-in iron ore and scrap metal-can quickly erode margins. Plus, the regulatory environment is a double-edged sword. The U.S. government's 50% tariffs on steel and aluminum imports, effective since June 2025, are a massive tailwind, creating a pricing floor for domestic producers. But, honestly, reliance on these trade policies is a risk in itself; their longevity is tied to political dynamics, and any change could quickly expose domestic steel to cheaper imports.

Another competitive threat is high imported steel penetration, particularly in the Canadian market, which challenges Cleveland-Cliffs Inc.'s pricing power. You have to watch that import share closely. The company's key market risks include:

• Macroeconomic Slowdown: Continued weakness in construction and general manufacturing.
• Trade Policy Volatility: Risk of tariffs (like the 50% tariffs) being modified or removed.
• Import Competition: High penetration of imported steel, especially in Canada.

Operational and Financial Risks

On the financial side, the company operates with a significant debt burden. The debt-to-equity ratio sits at 1.33, which is manageable with a current liquidity of $3.1 billion as of September 30, 2025, but it's defintely a risk if market conditions worsen. Also, while the focus on the automotive sector is a strength-automotive shipments rose to 30% of total shipments in Q3 2025-it creates a concentration risk. Any major volatility in automotive demand, like a prolonged strike or a sharp drop in vehicle sales, would directly impact nearly a third of their steel-making revenue.

The company also faced legal scrutiny in 2025, with investigations concerning potential breaches of federal securities laws after larger-than-expected losses in Q1 2025. Negative outcomes here could create significant governance and reputational issues. Here's the quick math on the 2025 profitability challenge:

Mitigation and Actionable Steps

The good news is that management is not sitting still; they are mapping clear actions to mitigate these risks. Operationally, they are executing a footprint optimization plan, which includes idling six underperforming facilities. This is expected to generate over $300 million in annual cost savings. They are also laser-focused on cost control, maintaining a target of $50 per net ton reduction in steel unit costs compared to 2024.

Strategically, the multiyear fixed-price contracts with major U.S. automakers are a smart hedge against short-term price volatility. Financially, they've reduced 2025 Capital Expenditures guidance to approximately $525 million and Selling, General, and Administrative (SG&A) expenses to about $550 million, showing a commitment to financial discipline and debt reduction. Plus, the expected end of an unprofitable slab supply contract in early December is projected to improve EBITDA by approximately $500 million into 2026. That's a massive tailwind. You should be tracking the execution of these cost-cutting and strategic initiatives, because they are the key to unlocking consistent profitability. If you want to dive deeper into the players betting on this turnaround, check out Exploring Cleveland-Cliffs Inc. (CLF) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear map of where Cleveland-Cliffs Inc. (CLF) goes from here, and the answer is a calculated pivot toward higher-margin, specialized products, plus strategic diversification. The company is actively reshaping its revenue mix, focusing on what they do best: domestic, high-quality steel for the critical North American market.

For the 2025 fiscal year, analysts project Cleveland-Cliffs Inc. will see full-year revenue of approximately $19.60 billion, a forecast that suggests a revenue growth rate of about 6% per annum. While the consensus full-year Earnings Per Share (EPS) estimate is a loss of around -$2.50, the expected year-over-year EPS growth of over 117% signals a significant improvement in the underlying business trajectory.

Key Growth Drivers and Product Innovations

The near-term growth is anchored in three concrete areas: automotive demand, a significant product innovation, and cost discipline. The core automotive steel business is seeing a demand recovery, representing about 30% of steelmaking revenues in the third quarter of 2025. This segment is defintely a powerhouse for them.

The most compelling innovation is their successful proof-of-concept trial with a major automaker, demonstrating their steel can directly replace aluminum in car manufacturing without requiring costly retooling. This move positions Cleveland-Cliffs Inc. to capture market share, especially with aluminum supply chains facing pressure. Longer-term, the company is strategically moving into rare earth mineral production at its existing mining sites in Michigan and Minnesota, a diversification that aligns with national security interests and could create a new, stable revenue stream.

• Automotive steel demand recovery.
• Steel replacing aluminum in autos.
• Foray into rare earth mineral production.
• Decarbonization for the 'green steel' market.

Strategic Initiatives and Competitive Edge

Cleveland-Cliffs Inc.'s competitive advantage hinges on its vertical integration (control from raw materials to finished product) and its market dominance in North American flat-rolled steel. This unique position is amplified by favorable U.S. trade policies, which make the domestic market hostile territory for dumped foreign steel. They are the only truly integrated producer with leadership in automotive, electrical, stainless, and plate steel.

Strategic moves are already in play to bolster this position. The company has a Memorandum of Understanding (MoU) with Korea's POSCO, which could involve an investment of approximately $700 million for a stake by early 2026, aiming to expand market reach. Plus, the end of an unprofitable slab supply contract with ArcelorMittal/Nippon Steel Calvert at the end of 2025 is expected to accelerate positive financial trends into the following year. Here's the quick math on cost control: footprint optimization initiatives are expected to deliver steel unit cost reductions of about $50 per net ton compared to 2024.

For a deeper dive into the investor base, you should read Exploring Cleveland-Cliffs Inc. (CLF) Investor Profile: Who's Buying and Why?

What this estimate hides is the potential impact of these strategic moves. If the rare earth mineral venture or the POSCO partnership accelerates, the 2026 outlook will be significantly better than the current 2025 loss. The market is pricing in operational improvement, not just top-line growth.

Next step: Finance should model the impact of the $50 per net ton cost reduction on the 2026 EBITDA forecast by the end of the month.