Critical Analysis: Salzgitter (OTCMKTS:SZGPY) vs. Cleveland-Cliffs (NYSE:CLF)

Salzgitter (OTCMKTS:SZGPY) and Cleveland-Cliffs (NYSE:CLF) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitability, dividends and earnings.

Profitability

This table compares Salzgitter and Cleveland-Cliffs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Salzgitter	0.49%	1.00%	0.42%
Cleveland-Cliffs	-6.42%	-15.48%	-4.61%

Risk & Volatility

Salzgitter has a beta of 1.65, suggesting that its stock price is 65% more volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 2.09, suggesting that its stock price is 109% more volatile than the S&P 500.

Institutional & Insider Ownership

67.7% of Cleveland-Cliffs shares are owned by institutional investors. 1.0% of Cleveland-Cliffs shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Salzgitter and Cleveland-Cliffs”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salzgitter	$10.16 billion	0.26	-$83.95 million	$0.09	55.00
Cleveland-Cliffs	$18.61 billion	0.29	-$1.48 billion	($2.34)	-4.02

Salzgitter has higher earnings, but lower revenue than Cleveland-Cliffs. Cleveland-Cliffs is trading at a lower price-to-earnings ratio than Salzgitter, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Salzgitter and Cleveland-Cliffs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salzgitter	0	3	4	0	2.57
Cleveland-Cliffs	2	9	0	0	1.82

Cleveland-Cliffs has a consensus price target of $12.90, indicating a potential upside of 37.24%. Given Cleveland-Cliffs’ higher possible upside, analysts clearly believe Cleveland-Cliffs is more favorable than Salzgitter.

Summary

Salzgitter beats Cleveland-Cliffs on 8 of the 14 factors compared between the two stocks.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.

About Cleveland-Cliffs

Cleveland-Cliffs is the largest flat-rolled steel company and the largest iron ore pellet producer in North America. The company is vertically integrated from mining through iron making, steelmaking, rolling, finishing and downstream with hot and cold stamping of steel parts and components. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.