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The mining giant’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing twice. It has a trailing four-quarter negative earnings surprise of roughly 1.6%, on average.
Freeport’s second-quarter results are likely to be affected by softer copper prices. However, the company is expected to have gained from its efforts to increase mining rates and lower unit net cash costs.
The stock has gained 41.4% in the past year compared with the industry’s 71.8% rise.
Image Source: Zacks Investment Research
Zacks Model
Our proven model predicts an earnings beat for Freeport this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for Freeport is +3.77%. This is because the Most Accurate Estimate is currently pegged at 32 cents while the Zacks Consensus Estimate stands at 31 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.
What do the Estimates Indicate?
For the second quarter of 2023, Freeport expects sales volumes to be 1.1 billion pounds of copper, 500,000 ounces of gold and 20 million pounds of molybdenum.
The Zacks Consensus Estimate for Freeport’s second-quarter consolidated revenues is currently pegged at $5,817 million, which suggests a year-over-year increase of 7.4%.
A Few Factors to Watch
Freeport’s second-quarter results are expected to reflect the impacts of weaker copper prices. Copper prices had started this year on a strong note, fueled by investor expectations of a surge in demand after the reopening of the China economy from COVID-led restrictions. However, softer demand from China and global economic concerns weighed on copper prices during the second quarter.
The impacts of weaker realized copper prices are likely to reflect on Freeport’s second-quarter revenues and margins. Our estimate for average realized price for copper for the second quarter is pegged at $4 per pound compared with $4.11 reported in the prior quarter.
However, the company is likely to have benefited from lower year over year unit net cash costs in the June quarter, partly due to reduced inflationary pressure, especially in energy costs. Our estimate for second-quarter consolidated net cash costs per pound of copper currently stands at $1.51, which indicates a sequential decrease of 14.2%.
Moreover, strong performance at PT Freeport Indonesia and efforts to increase operating rates at Cerro Verde and El Abra mines are likely to have aided the company’s copper volumes in the quarter to be reported. FCX is expected to have witnessed strong volumes in its Grasberg operations in the June quarter on the return of production to normal levels following temporary disruptions. The company is also expected to have benefited from higher mining rates in South America. Our estimate for consolidated copper sales for the second quarter is 1,065 million pounds, which suggests a 28% increase on a sequential basis.
Here are some companies in the basic materials space you may want to consider, as our model shows these too have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for AEM’s earnings for the second quarter is currently pegged at 54 cents.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02%.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents. It currently carries a Zacks Rank #2.
Kinross Gold Corporation (KGC - Free Report) , which is scheduled to release earnings on Aug 2, has an Earnings ESP of +5.56% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for earnings for KGC for the second quarter is pegged at 9 cents.
Image: Bigstock
Freeport (FCX) Gears Up for Q2 Earnings: What's in the Offing?
Freeport-McMoRan Inc. (FCX - Free Report) is set to release second-quarter 2023 results before the opening bell on Jul 20.
The mining giant’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing twice. It has a trailing four-quarter negative earnings surprise of roughly 1.6%, on average.
Freeport’s second-quarter results are likely to be affected by softer copper prices. However, the company is expected to have gained from its efforts to increase mining rates and lower unit net cash costs.
The stock has gained 41.4% in the past year compared with the industry’s 71.8% rise.
Image Source: Zacks Investment Research
Zacks Model
Our proven model predicts an earnings beat for Freeport this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for Freeport is +3.77%. This is because the Most Accurate Estimate is currently pegged at 32 cents while the Zacks Consensus Estimate stands at 31 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.
What do the Estimates Indicate?
For the second quarter of 2023, Freeport expects sales volumes to be 1.1 billion pounds of copper, 500,000 ounces of gold and 20 million pounds of molybdenum.
The Zacks Consensus Estimate for Freeport’s second-quarter consolidated revenues is currently pegged at $5,817 million, which suggests a year-over-year increase of 7.4%.
A Few Factors to Watch
Freeport’s second-quarter results are expected to reflect the impacts of weaker copper prices. Copper prices had started this year on a strong note, fueled by investor expectations of a surge in demand after the reopening of the China economy from COVID-led restrictions. However, softer demand from China and global economic concerns weighed on copper prices during the second quarter.
The impacts of weaker realized copper prices are likely to reflect on Freeport’s second-quarter revenues and margins. Our estimate for average realized price for copper for the second quarter is pegged at $4 per pound compared with $4.11 reported in the prior quarter.
However, the company is likely to have benefited from lower year over year unit net cash costs in the June quarter, partly due to reduced inflationary pressure, especially in energy costs. Our estimate for second-quarter consolidated net cash costs per pound of copper currently stands at $1.51, which indicates a sequential decrease of 14.2%.
Moreover, strong performance at PT Freeport Indonesia and efforts to increase operating rates at Cerro Verde and El Abra mines are likely to have aided the company’s copper volumes in the quarter to be reported. FCX is expected to have witnessed strong volumes in its Grasberg operations in the June quarter on the return of production to normal levels following temporary disruptions. The company is also expected to have benefited from higher mining rates in South America. Our estimate for consolidated copper sales for the second quarter is 1,065 million pounds, which suggests a 28% increase on a sequential basis.
Freeport-McMoRan Inc. Price and EPS Surprise
Freeport-McMoRan Inc. price-eps-surprise | Freeport-McMoRan Inc. Quote
Other Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these too have the right combination of elements to post an earnings beat this quarter:
Agnico Eagle Mines Limited (AEM - Free Report) , which is scheduled to release earnings on Jul 26, has an Earnings ESP of +3.84% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for AEM’s earnings for the second quarter is currently pegged at 54 cents.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02%.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents. It currently carries a Zacks Rank #2.
Kinross Gold Corporation (KGC - Free Report) , which is scheduled to release earnings on Aug 2, has an Earnings ESP of +5.56% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for earnings for KGC for the second quarter is pegged at 9 cents.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.