A month has gone by since the last earnings report for Freeport-McMoRan (FCX). Shares have added about 17.8% 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 Revenues Lag Estimates in Q4
Freeport recorded net income (attributable to common stock) of $1.1 billion or 74 cents per share in fourth-quarter 2021, up from $708 million or 48 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at 96 cents. The figure missed the Zacks Consensus Estimate of 97 cents.
Revenues rose roughly 37% year over year to $6,164 million. The figure also missed the Zacks Consensus Estimate of $6,226.8 million. The mining giant benefited from higher realized copper prices and sales and in the quarter.
Operational Update
Copper production rose around 20% year over year to 1,033 million pounds in the fourth quarter.
Consolidated sales from mines went up 18% year over year to 1,020 million pounds of copper, driven mainly by the ramp-up of underground mining at PT-FI and higher milling rates across North America and South America. The company sold 395,000 ounces of gold (up around 35%) and 19 million pounds (down roughly 10%) of molybdenum during the quarter.
Consolidated average unit net cash costs per pound of copper were $1.29, up about 0.8% year over year. The figure was higher than the company’s October 2021 estimate of $1.26 per pound, mainly due to nonrecurring labor-related charges at the Cerro Verde mine for collective labor agreements.
Average realized price for copper was $4.42 per pound, up roughly 30% year over year. Average realized price per ounce for gold fell around 3% year over year to $1,808. Average realized price per pound for molybdenum was $19.42, up around 95% year over year.
FY21 Results
Earnings for full-year 2021 were $2.90 per share compared with earnings of 41 cents per share a year ago. Net sales increased 61% year over year to $22,845 million.
Financial Position
Cash and cash equivalents at the end of 2021 were $8,068 million, up 121% year over year. The company’s total debt was $9,450 million, down around 3% year over year.
Cash flows provided by operations were $2.3 billion for the fourth quarter.
Guidance
For 2022, Freeport anticipates consolidated sales volumes to be roughly 4.3 billion pounds of copper.
The company also expects gold sales volumes of 1.6 million ounces for 2022. It also expects sales of 80 million pounds of molybdenum for the year.
For the first quarter of 2022, Freeport expects sales volumes to be 970 million pounds of copper, 380,000 ounces of gold and 20 million pounds of molybdenum.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -7.93% due to these changes.
VGM Scores
Currently, Freeport-McMoRan has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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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