Freeport-McMoRan shares fell by -1.3% during the day's afternoon session, and are now trading at a price of $42.7. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Freeport-McMoRan's Valuation Is in Line With Its Sector Averages:
Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. The company belongs to the Basic Materials sector, which has an average price to earnings (P/E) ratio of 24.53 and an average price to book (P/B) ratio of 2.64. In contrast, Freeport-McMoRan has a trailing 12 month P/E ratio of 30.9 and a P/B ratio of 3.5.
Freeport-McMoRan has moved 16.5% over the last year compared to 29.1% for the S&P 500 — a difference of -12.6%. Freeport-McMoRan has a 52 week high of $55.24 and a 52 week low of $36.04.
The Firm Has a Declining EPS Growth Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $18,628 | $14,402 | $14,198 | $22,845 | $22,780 | $22,855 |
| Operating Margins | 26% | 8% | 17% | 37% | 31% | 27% |
| Net Margins | 16% | -1% | 6% | 23% | 20% | 16% |
| Net Income (M) | $2,894 | -$189 | $865 | $5,365 | $4,479 | $3,751 |
| Net Interest Expense (M) | -$945 | -$620 | -$598 | -$602 | -$560 | -$515 |
| Depreciation & Amort. (M) | $1,754 | $1,412 | $1,528 | $1,998 | $2,019 | $2,068 |
| Diluted Shares (M) | 1,457 | 1,457 | 1,461 | 1,482 | 1,451 | 1,443 |
| Earnings Per Share | $1.78 | -$0.17 | $0.41 | $2.9 | $2.39 | $1.28 |
| EPS Growth | n/a | -109.55% | 341.18% | 607.32% | -17.59% | -46.44% |
| Avg. Price | $14.82 | $10.84 | $13.42 | $35.42 | $40.96 | $42.7 |
| P/E Ratio | 8.28 | -63.76 | 32.73 | 12.09 | 17.14 | 33.36 |
| Free Cash Flow (M) | $1,892 | -$1,170 | $1,056 | $5,600 | $1,670 | $455 |
| CAPEX (M) | $1,971 | $2,652 | $1,961 | $2,115 | $3,469 | $4,824 |
| EV / EBITDA | 4.36 | 13.32 | 8.88 | 5.99 | 7.91 | 8.97 |
| Total Debt (M) | $11,128 | $19,647 | $19,388 | $18,528 | $20,203 | $18,078 |
| Net Debt / EBITDA | 1.06 | 7.04 | 3.97 | 1.01 | 1.33 | 1.61 |
| Current Ratio | 3.14 | 2.47 | 2.72 | 2.52 | 2.46 | 2.42 |
Freeport-McMoRan has growing revenues and increasing reinvestment in the business and strong operating margins with a stable trend. Additionally, the company's financial statements display an excellent current ratio of 2.42 and healthy leverage levels. However, the firm suffers from declining EPS growth and positive cash flows.
