Comparing Olympic Steel (ZEUS) & Cliffs Natural Resources (NYSE:CLF)

Cliffs Natural Resources (NYSE: CLF) and Olympic Steel (NASDAQ:ZEUS) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, dividends, analyst recommendations, risk, profitabiliy and institutional ownership.

Dividends

Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. Cliffs Natural Resources does not pay a dividend. Olympic Steel pays out 10.7% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Cliffs Natural Resources and Olympic Steel’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Cliffs Natural Resources	$2.34 billion	0.98	$480.50 million	$0.22	35.27
Olympic Steel	$1.13 billion	0.18	$35.05 million	$0.75	24.13

Cliffs Natural Resources has higher revenue and earnings than Olympic Steel. Olympic Steel 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.

Volatility and Risk

Cliffs Natural Resources has a beta of 1.69, meaning that its share price is 69% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500.

Profitability

This table compares Cliffs Natural Resources and Olympic Steel’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%
Olympic Steel	0.71%	2.82%	1.26%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cliffs Natural Resources and Olympic Steel, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cliffs Natural Resources	3	2	4	0	2.11
Olympic Steel	0	1	2	0	2.67

Cliffs Natural Resources presently has a consensus price target of $8.29, suggesting a potential upside of 6.77%. Olympic Steel has a consensus price target of $22.33, suggesting a potential upside of 23.39%. Given Olympic Steel’s stronger consensus rating and higher possible upside, analysts plainly believe Olympic Steel is more favorable than Cliffs Natural Resources.

Institutional and Insider Ownership

66.6% of Cliffs Natural Resources shares are owned by institutional investors. Comparatively, 69.7% of Olympic Steel shares are owned by institutional investors. 0.5% of Cliffs Natural Resources shares are owned by insiders. Comparatively, 18.3% of Olympic Steel shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Cliffs Natural Resources Company Profile

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.

Olympic Steel Company Profile

Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.