What Our Analysts Know About Freeport-McMoRan

Freeport-McMoRan logged a -0.8% change during today's morning session, and is now trading at a price of $38.34 per share.

Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. Based in Phoenix, AZ, the large-cap Basic Materials company has 25,600 full time employees. Freeport-McMoRan has offered a 1.6% dividend yield over the last 12 months.

Growing Revenues With Increasing Reinvestment in the Business:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $14,402 $14,198 $22,845 $22,780
Gross Margins 9.0% 17.9% 38.6% 33.8%
Operating Margins 4.7% 13.8% 36.3% 30.9%
Net Margins -1.66% 4.22% 18.85% 15.22%
Net Income (MM) -$239 $599 $4,306 $3,468
Net Interest Expense (MM) -620 -598 -602 -560
Net Interest Expense (MM) -$620 -$598 -$602 -$560
Depreciation & Amort. (MM) -$1,412 -$1,528 -$1,998 -$2,019
Earnings Per Share -$0.17 $0.41 $2.9 $1.78
EPS Growth n/a 341.18% 607.32% -38.62%
Diluted Shares (MM) 1,451 1,461 1,482 1,433
Free Cash Flow (MM) -$1,170 $1,056 $5,600 $1,670
Capital Expenditures (MM) -$2,652 -$1,961 -$2,115 -$3,469
Net Current Assets (MM) -$15,561 -$14,173 -$10,173 -$10,609
Current Ratio 2.43 2.72 2.52 2.46
Long Term Debt (MM) $9,821 $9,677 $9,078 $9,583
Net Debt / EBITDA 3.39 1.65 0.15 0.3

Freeport-McMoRan benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and an excellent current ratio. The company's financial statements show low leverage and generally positive cash flows. Furthermore, Freeport-McMoRan has similar gross margins to its peers and average net margins with a positive growth rate.

Freeport-McMoRan Has Elevated P/B and P/E Ratios:

Freeport-McMoRan has a trailing twelve month P/E ratio of 20.9, compared to an average of 10.03 for the Basic Materials sector. Based on its EPS guidance of $2.13, the company has a forward P/E ratio of 17.5. According to the 68.4% compound average growth rate of Freeport-McMoRan's historical and projected earnings per share, the company's PEG ratio is 0.31. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.5%. On this basis, the company's PEG ratio is 1.82. This suggests that these shares are overvalued. Furthermore, Freeport-McMoRan is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.42 is higher than the sector average of 2.08. The company's shares are currently trading 117.8% above their Graham number. Overall, Freeport-McMoRan's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Freeport-McMoRan Has an Average Rating of Buy:

The 21 analysts following Freeport-McMoRan have set target prices ranging from $29.0 to $57.0 per share, for an average of $45.66 with a buy rating. As of April 2023, the company is trading -18.4% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Freeport-McMoRan has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 80.6% of the company's shares, and the insider ownership rate stands at 0.56%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 8% stake in the company is worth $4,551,310,117.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.