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Freeport (FCX) to Report Q2 Earnings: What's in the Offing?

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Freeport-McMoRan Inc. (FCX - Free Report) is set to release second-quarter 2022 results before the opening bell on Jul 21.

The mining giant’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 10%, on average. Freeport’s second-quarter results are likely to have been impacted by sequentially higher unit net cash costs and lower copper prices. However, the company is likely to have gained from higher mining rates.
 
The stock has lost 15.4% in the past year compared with the industry’s 25.2% decline.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Let’s see how things are shaping up for the upcoming announcement.

What do the Estimates Indicate?

For the second quarter, Freeport expects sales volumes to be 1 billion pounds of copper, 405,000 ounces of gold and 21 million pounds of molybdenum.

The Zacks Consensus Estimate for Freeport’s second-quarter consolidated revenues is currently pegged at $6,683.3 million, which suggests a year-over-year rise of 16.3%.

The Zacks Consensus Estimate for second-quarter consolidated net cash costs per pound of copper is currently pegged at $1.44, which calls for roughly 2.7% fall on a year-over-year basis and an increase of 8.3% on a sequential comparison basis. The same for average realized price for copper stands at $4.56 per pound, reflecting a 5.1% rise year over year and a decline of 2.1% on a sequential comparison basis.

The consensus mark for consolidated copper sales for the second quarter is pegged at 1,053 million pounds, which suggests a year-over-year rise of 13.3%.

A Few Factors to Watch

Freeport’s second-quarter results are expected to reflect the impacts of weaker copper prices. Copper had a stellar run in 2021, thanks to a strong rebound in industrial demand from the pandemic-led downturn and supply constraints. The widely-used industrial metal witnessed a roughly 25% surge in 2021. The momentum continued in the first quarter of 2022.

However, copper prices lost the momentum in the June quarter. The uncertainties surrounding the global economy and new coronavirus restrictions in China dwindled demand for the red metal, hurting prices. Copper prices headed south from late April after hitting an all-time high in March driven by concerns over supply-chain disruptions, exacerbated by Russia's invasion of Ukraine, a spike in energy costs and low global inventories. Prices fell around 20% in the second quarter, impacted by slowdown in China due to fresh lockdowns and fears of a recession.

The impacts of sequentially lower average realized copper prices are likely to reflect on Freeport’s June quarter results. The company is also likely to have witnessed sequentially higher unit net cash costs in the quarter partly due to higher energy prices.

Meanwhile, the ramp-up of underground mining at PT Freeport Indonesia and efforts to increase operating rates at Cerro Verde and El Abra mines are likely to have driven the company’s copper sales volumes in the quarter to be reported. The company is expected to have benefited from higher mining rates in South America.

 

FreeportMcMoRan Inc. Price and EPS Surprise

 

FreeportMcMoRan Inc. Price and EPS Surprise

FreeportMcMoRan Inc. price-eps-surprise | FreeportMcMoRan Inc. Quote

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for Freeport this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Freeport is -40.08%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 86 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Freeport currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Aug 3, has an Earnings ESP of +17.01% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Albemarle's second-quarter earnings has been revised 10.3% upward over the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.80.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jul 28, has an Earnings ESP of +1.03% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for Celanese’s second-quarter earnings has been revised 3.9% upward over the past 60 days. The Zacks Consensus Estimate for CE’s earnings for the quarter is currently pegged at $4.58.

FMC Corporation (FMC - Free Report) , expected to release earnings on Aug 2, has an Earnings ESP of +0.62% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for FMC’s second-quarter earnings has been stable over the past 60 days. The consensus estimate for FMC’s earnings for the second quarter stands at $1.90.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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