A month has gone by since the last earnings report for Freeport-McMoRan (FCX). Shares have added about 15.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Freeport-McMoRan due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Freeport’s Earnings and Sales Top Estimates in Q3
Freeport reported net income (attributable to common stock) of $329 million or 22 cents per share in third-quarter 2020 against a net loss of $207 million or 15 cents in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at 29 cents that surpassed the Zacks Consensus Estimate of 24 cents.
Revenues rose 16.4% year over year to $3,851 million. The figure also beat the Zacks Consensus Estimate of $3,757.6 million.
Operational Update
Copper production fell 2.3% year over year to 844 million pounds in the third quarter.
Consolidated sales from mines rose 6.7% year over year to 848 million pounds of copper. The company produced 237,000 ounces of gold and 19 million pounds of molybdenum during the quarter.
Consolidated average unit net cash costs per pound of copper were $1.32, down 17% year over year.
Average realized price for copper was $3.01 per pound, up 14.9% year over year. Average realized price per ounce for gold increased 27.9% year over year to $1,902. Average realized price per pound for molybdenum was $9.23, down 28.4% year over year.
Financial Position
Cash and cash equivalents at the end of the third quarter were $2,403 million, up 6.9% year over year. The company’s long-term debt was $9,983 million.
Cash flows provided by operations were $1,690 million for the nine months ended Sep 30, up 28.8% year over year.
Guidance
For 2020, Freeport now anticipates consolidated sales volumes to be 3.18 billion pounds of copper compared with 3.15 billion pounds expected earlier.
The company continues to expect gold sales volumes of 800,000 ounces for 2020, unchanged from previous forecast. It now expects sales of 80 million pounds of molybdenum compared with 77 million pounds expected earlier.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.21% due to these changes.
VGM Scores
Currently, Freeport-McMoRan has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Freeport-McMoRan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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