Cleveland-Cliffs (NYSE:CLF) and Sigma Lithium (NASDAQ:SGML) Critical Contrast

Sigma Lithium (NASDAQ:SGML) and Cleveland-Cliffs (NYSE:CLF) are both materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.

Insider and Institutional Ownership

64.9% of Sigma Lithium shares are owned by institutional investors. Comparatively, 67.7% of Cleveland-Cliffs shares are owned by institutional investors. 48.6% of Sigma Lithium shares are owned by company insiders. Comparatively, 0.9% of Cleveland-Cliffs shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Sigma Lithium and Cleveland-Cliffs, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sigma Lithium	3	0	4	0	2.14
Cleveland-Cliffs	2	7	2	0	2.00

Sigma Lithium currently has a consensus target price of $17.38, suggesting a potential upside of 81.37%. Cleveland-Cliffs has a consensus target price of $12.25, suggesting a potential upside of 0.71%. Given Sigma Lithium’s stronger consensus rating and higher possible upside, research analysts clearly believe Sigma Lithium is more favorable than Cleveland-Cliffs.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sigma Lithium	-19.36%	-37.40%	-7.66%
Cleveland-Cliffs	-4.56%	-13.37%	-3.96%

Earnings & Valuation

This table compares Sigma Lithium and Cleveland-Cliffs”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sigma Lithium	$110.01 million	9.80	-$50.19 million	($0.24)	-39.92
Cleveland-Cliffs	$18.61 billion	0.37	-$1.48 billion	($1.62)	-7.51

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

Volatility and Risk

Sigma Lithium has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500.

About Sigma Lithium

Sigma Lithium Corporation engages in the exploration and development of lithium deposits in Brazil. It holds a 100% interest in the Grota do Cirilo, Genipapo, Santa Clara, and São José properties comprising 29 mineral rights covering an area of approximately 185 square kilometers located in the Araçuaí and Itinga regions of the state of Minas Gerais, Brazil. It serves electric vehicle industries worldwide. The company was formerly known as Sigma Lithium Resources Corporation and changed its name to Sigma Lithium Corporation in July 2021. The company is headquartered in São Paulo, Brazil.

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.