It has been about a month since the last earnings report for Freeport-McMoRan (FCX). Shares have added about 7.8% 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 Beat, Sales Miss Estimates in Q2
Freeport reported net income (attributable to common stock) of $53 million or 3 cents per share in second-quarter 2020 against a net loss of $72 million or 5 cents in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at 3 cents, which beat the Zacks Consensus Estimate of a loss of 3 cents.
Revenues fell 13.9% year over year to $3,054 million. The figure missed the Zacks Consensus Estimate of $3,204 million.
Operational Update
Copper production fell 1.2% year over year to 767 million pounds in the second quarter.
Consolidated sales from mines fell 5.9% year over year to 759 million pounds of copper. The company produced 191,000 ounces of gold and 19 million pounds of molybdenum during the quarter.
Consolidated average unit net cash costs per pound of copper were $1.47, down 23.4% year over year.
Average realized price for copper was $2.55 per pound, down 7.3% year over year. Average realized price per ounce for gold increased 29.5% year over year to $1,749. Average realized price per pound for molybdenum was $10.53, down 19.9% year over year.
Financial Position
Cash and cash equivalents at the end of the second quarter were $1,465 million, down 44.1% year over year. The company’s long-term debt was $9,824 million.
Cash flows provided by operations were $453 million for the six months ended Jun 30, down 58.4% year over year.
Guidance
For 2020, Freeport now anticipates consolidated sales volumes to be 3.15 billion pounds of copper compared with 3.1 billion pounds expected earlier.
The company expects gold sales volumes of 800,000 ounces in 2020, up from 780,000 ounces projected earlier. The company now expects sales of 77 million pounds of molybdenum compared with from 80 million pounds expected earlier.
For the third quarter, Freeport expects sales volumes to be 790 million pounds of copper, 220,000 ounces of gold and 18 million pounds of molybdenum.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 30.75% due to these changes.
VGM Scores
Currently, Freeport-McMoRan has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. 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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