Freeport-McMoRan (NYSE: FCX), one of many largest producers of copper, reported disappointing leads to This fall of 2024, with revenues dropping 3.1% year-over-year to $5.72 billion, and earnings per share of $0.19 down 42% year-over-year. The inventory dropped round 12% put up the end result announcement and has since then recovered barely. General, whereas FCX’s near-term efficiency could also be impacted by gross sales disruptions and prices, its long-term outlook stays favorable, pushed by sturdy demand for copper and potential cost-saving measures. We imagine Freeport valuation to be round $46 per share, 19% above the present value ranges.
How Did FCX Fare In This fall?
Whereas electrification developments and AI infrastructure investments supported demand, weak spot in conventional sectors like residential development and autos had an impact, with the corporate reporting decrease gross sales. The corporate’s Indonesian Grasberg mine produced 376 million kilos of copper, falling beneath estimations, because of operational challenges, together with ongoing smelter points. Moreover, copper exports from Indonesia confronted regulatory delays and restrictions. FCX obtained late approvals in This fall 2024, which impacted cargo volumes. Whereas copper costs remained comparatively sturdy, macroeconomic elements—together with a robust U.S. greenback, commerce uncertainties, and slower-than-expected progress in China—created headwinds. Having stated that, for the total yr 2024, the corporate reported income of $25.5 billion, which was up 11% from 2023. Nevertheless, web revenue solely elevated by 2.6% to $1.89 billion, and revenue margins fell to 7.4% from 8.1%. Profitability was impacted because of larger prices in sure areas, significantly in North America, the place unit web money prices reached $3.04 per pound, considerably larger than in Indonesia ($1.66 per pound). Individually, if you would like upside with a smoother experience than a person inventory, contemplate the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Picture by Łukasz Klepaczewski from Pixabay
What Does This Imply For FCX Inventory?
The rise in FCX inventory over the past 4-year interval has been removed from constant, with annual returns being extra risky than the S&P 500. Returns for the inventory had been 61% in 2021, -7% in 2022, 14% in 2023, and -10% in 2024. The Trefis Excessive High quality (HQ) Portfolio, with a group of 30 shares, is far much less risky. And it has comfortably outperformed the S&P 500 over the past 4-year interval.
Why is that? As a bunch, HQ Portfolio shares offered higher returns with much less threat versus the benchmark index; much less of a roller-coaster experience as evident in HQ Portfolio efficiency metrics. Given the present unsure macroeconomic atmosphere round fee cuts and a number of wars, might FCX face an analogous scenario because it did in 2023 and 2024 and underperform the S&P over the subsequent 12 months – or will it see a robust leap?
Regardless of the challenges, FCX stays optimistic about long-term copper demand progress, significantly as the worldwide vitality transition and infrastructure investments proceed to drive elevated copper consumption. The corporate expects its Indonesian smelter to restart manufacturing by mid-2025. For the total yr 2025, the corporate expects to promote 4.0 billion kilos of copper, 1.6 million ounces of gold, and 88 million kilos of molybdenum. Working money flows are projected to achieve $6.2 billion. The corporate additionally anticipates an 8% enhance in U.S. copper manufacturing in 2025, with additional progress anticipated in 2026 and 2027. Gold manufacturing steering for 2025 is 7% larger than earlier estimates, pushed by stock drawdowns and barely larger ore grades. Regardless of latest challenges, together with decrease income in This fall 2024 because of declining ore grades and cargo timing points, FCX stays centered on value administration, capital effectivity, and long-term progress.
| Returns | Feb 2025 MTD [1] |
Since begin of 2024 [1] |
2017-25 Complete [2] |
| FCX Return | 8% | -8% | 218% |
| S&P 500 Return | 1% | 28% | 173% |
| Trefis Strengthened Worth Portfolio | -2% | 20% | 716% |
[1] Returns as of two/20/2025
[2] Cumulative complete returns because the finish of 2016
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
