We've been asking ourselves recently if the market has placed a fair valuation on Freeport-McMoRan. Let's dive into some of the fundamental values of this Large-Cap Basic Materials company to determine if there might be an opportunity here for value-minded investors.
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 20.25 and an average price to book (P/B) ratio of 2.31. In contrast, Freeport-McMoRan has a trailing 12 month P/E ratio of 32.2 and a P/B ratio of 3.35.
Freeport-McMoRan has moved -2.7% over the last year compared to 16.5% for the S&P 500 — a difference of -19.1%. Freeport-McMoRan has a 52 week high of $52.61 and a 52 week low of $27.66.
Strong Revenue Growth and Healthy Leverage Levels:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $14,402 | $14,198 | $22,845 | $22,780 | $22,855 | $25,455 |
| Operating Margins | 8% | 17% | 37% | 31% | 27% | 27% |
| Net Margins | -1% | 6% | 23% | 20% | 16% | 17% |
| Net Income (M) | -$189 | $865 | $5,365 | $4,479 | $3,751 | $4,399 |
| Net Interest Expense (M) | -$620 | -$598 | -$602 | -$560 | -$515 | -$319 |
| Depreciation & Amort. (M) | $1,412 | $1,528 | $1,998 | $2,019 | $2,068 | $2,241 |
| Diluted Shares (M) | 1,457 | 1,461 | 1,482 | 1,451 | 1,443 | 1,445 |
| Earnings Per Share | -$0.17 | $0.41 | $2.9 | $2.39 | $1.28 | $1.3 |
| EPS Growth | n/a | 341.18% | 607.32% | -17.59% | -46.44% | 1.56% |
| Avg. Price | $10.84 | $13.42 | $35.42 | $40.96 | $42.57 | $42.28 |
| P/E Ratio | -63.76 | 32.73 | 12.09 | 17.14 | 33.26 | 32.52 |
| Free Cash Flow (M) | -$1,170 | $1,056 | $5,600 | $1,670 | $455 | $2,352 |
| CAPEX (M) | $2,652 | $1,961 | $2,115 | $3,469 | $4,824 | $4,808 |
| EV / EBITDA | 13.32 | 8.88 | 5.99 | 7.91 | 8.95 | 8.19 |
| Total Debt (M) | $19,647 | $19,388 | $18,528 | $20,203 | $18,078 | $17,855 |
| Net Debt / EBITDA | 7.04 | 3.97 | 1.01 | 1.33 | 1.61 | 1.53 |
| Current Ratio | 2.47 | 2.72 | 2.52 | 2.46 | 2.42 | 2.42 |
Freeport-McMoRan has rapidly growing revenues and increasing reinvestment in the business, strong operating margins with a positive growth rate, and exceptional EPS growth. The company also benefits from generally positive cash flows, an excellent current ratio of 2.42, and healthy leverage levels.
