Freeport (FCX) to Post Q4 Earnings: What’s in the Offing?

Freeport-McMoRan Inc.


FCX

is set to release fourth-quarter 2020 results on before the opening bell on Jan 26.

The mining giant surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 87%. Freeport’s fourth-quarter results are likely to reflect the benefits of higher copper prices.

The stock has rallied 158.5% in the past year compared with the

industry

’s 83.8% rise.

Let’s see how things are shaping up for the upcoming announcement.

Zacks Model

Our proven model predicts an earnings beat for Freeport this time around. The combination of a positive

Earnings ESP

and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP:

Earnings ESP for Freeport is +1.55%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 38 cents. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

Zacks Rank:

Freeport currently carries a Zacks Rank #2.

What do the Estimates Indicate?

The Zacks Consensus Estimate for Freeport’s fourth-quarter consolidated revenues is currently pegged at $4,251 million, which suggests a year-over-year rise of 8.7%.

The Zacks Consensus Estimate for fourth-quarter consolidated net cash costs per pound of copper is currently pegged at $1.28, which calls for 23.4% fall on a year-over-year basis. The same for average realized price for copper stands at $3 per pound, reflecting a 9.9% rise year over year.

Moreover, the consensus mark for consolidated copper sales for the fourth quarter is pegged at 845 million pounds, which suggests a decline of 6.7%.

Factors at Play

For the fourth quarter, Freeport expects sales volumes to be 840 million pounds of copper, 270,000 ounces of gold and 21 million pounds of molybdenum.

Copper has bounced back strongly after taking a beating in the earlier part of 2020 as the coronavirus pandemic ravaged the global economy. The widely-used industrial metal has witnessed a strong rally since second-quarter 2020 after plunging to multi-year lows in March. The rebound has been backed by supply chain disruptions associated with the pandemic, a recovery in the industrial activity and a surge in demand from top consumer China.

Notably, copper prices hit a seven-year high in November 2020 on the back of strong demand in China and concerns over supply disruption from top producer Chile. Prices also propelled to an eight-year high in December. The prices of the red metal were up more than 25% year over year for 2020.

Copper has been gaining on solid manufacturing data from top consumer China as the economy continues to recover from the pandemic. Also, a pickup in industrial activity and optimism surrounding vaccines and rollouts in certain economies have been working in favor of the metal.

The demand-supply imbalance pushed copper prices north in the December quarter and is expected to have boosted Freeport’s margins in the quarter.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V.


LYB

, scheduled to release earnings on Jan 29, has an Earnings ESP of +13.00% and carries a Zacks Rank #1. You can see


the complete list of today’s Zacks #1 Rank stocks here


.

Celanese Corporation


CE

, scheduled to release earnings on Jan 28, has an Earnings ESP of +6.25% and carries a Zacks Rank #2.

Ecolab Inc.


ECL

, scheduled to release earnings on Feb 16, has an Earnings ESP of +0.08% and carries a Zacks Rank #3.

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