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Freeport-McMoran (FCX) Down 14.9% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Freeport-McMoran, Inc. (FCX - Free Report) . Shares have lost about 14.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Freeport’s Q4 Earnings Miss Estimates, Revenues Beat
Freeport reported net income (attributable to common stock) of $0.21 per share for fourth-quarter 2016, as against the year-ago loss of $3.47 per share.
Net income for the reported quarter includes net charges of $59 million, or $0.04 per share, mainly reflecting estimated losses on assets held for sale and restructuring charges related to the oil and gas segment, partly offset by a gain on redeemable non-controlling interest. Barring that impact, adjusted earnings was $0.25 a share in the fourth quarter, missing the Zacks Consensus Estimate of $0.32.
Revenues grew around 24.5% year over year to $4,377 million in the reported quarter and exceeded the Zacks Consensus Estimate of $4,062 million.
Consolidated copper sales from mines (including volumes from Tenke Fungurume through Nov 16) increased to 1.2 billion pounds of copper in the fourth quarter from 1.1 billion pounds in the year-ago quarter due to higher volumes from Cerro Verde and PT-FI, partly offset by lower sales in North America. Gold sales went up to 405,000 ounces in the reported quarter from 338,000 ounces a year ago. Sales of molybdenum increased to 22 million pounds in the reported quarter from 20 million pounds a year ago.
Full-Year 2016
Freeport reported a loss of $3.16 per share for full-year 2016, narrower than the loss of $11.31 per share reported year ago. Sales increased 1.5% year over year to $14,830 million in 2016.
Operational Update
Consolidated average unit net cash costs (net of by-product credits including Tenke) declined to $1.20 per pound of copper from $1.45 per pound in the year-ago quarter. This is mainly attributable to higher copper sales volumes from Cerro Verde and PT-FI and higher by-product credits.
Average realized price per ounce for gold rose to $1,174 in the quarter from $1,067 a year ago, while average realized price per pound for copper increased to $2.47 from $2.18 in the prior-year quarter.
In the fourth quarter, Freeport concluded the sales of the Deepwater GOM and onshore California oil and gas properties, for $2.6 billion and contingent consideration. In Jan 2017, the company agreed to sell its properties in the Madden area for $20 million cash. The deal is projected to complete in first-quarter 2017.
Post this transaction, Freeport’s portfolio will include oil and natural gas production onshore in South Louisiana and on the GOM Shelf and oil production offshore California. Sales volume from these assets was 1.5 million barrels of oil equivalent (MMBOE) in the fourth quarter.
Realized revenues for oil and gas operations were $39.88 million compared with $37.49 million in the year-ago quarter. Cash production costs totaled $14.62 million in the quarter. Sales volume was 10.5 million MMBOE in the quarter.
Financial Position
Freeporthad cash and cash equivalents of $4,425 million as of Dec 31, 2016, up from the year ago $177 million. Freeport total debt was $16,027 million as of Dec 31, 2016, down from the year ago $20,324 million.
The company’s operating cash flows were $1,135 million in the fourth quarter and capital expenditures totaled $504 million.
In Nov 2016, Freeport concluded its registered at-the-market (ATM) offering of common stock announced in Jul 2016. The company raised $1.5 billion in gross proceeds through the sale of 116.5 million shares of common stock.
Guidance
For 2017, Freeport anticipates consolidated sales to be around 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum. The expected sales are subject to the resumption of concentrate exports by PT-FI in Feb 2017 as well as PT Smelting’s export license being renewed. PT-FI’s share of production is expected to lower by roughly 70 million pounds of copper and 100,000 ounces of gold for each month of delay in obtaining approval to export.
Consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.06 per pound of copper in 2017.
For 2017, capital expenditures are expected to be roughly $1.8 billion, including $1.1 billion for key mining projects.
As previously announced, Freeport plans to strengthen its balance sheet and speed up its debt-reduction initiatives. Freeport expects to generate substantial cash flows in 2017 for debt reduction.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted 51.61% downward due to these changes.
At this time, Freeport-McMoran's stock has a nice Growth score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Freeport-McMoran (FCX) Down 14.9% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Freeport-McMoran, Inc. (FCX - Free Report) . Shares have lost about 14.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Freeport’s Q4 Earnings Miss Estimates, Revenues Beat
Freeport reported net income (attributable to common stock) of $0.21 per share for fourth-quarter 2016, as against the year-ago loss of $3.47 per share.
Net income for the reported quarter includes net charges of $59 million, or $0.04 per share, mainly reflecting estimated losses on assets held for sale and restructuring charges related to the oil and gas segment, partly offset by a gain on redeemable non-controlling interest. Barring that impact, adjusted earnings was $0.25 a share in the fourth quarter, missing the Zacks Consensus Estimate of $0.32.
Revenues grew around 24.5% year over year to $4,377 million in the reported quarter and exceeded the Zacks Consensus Estimate of $4,062 million.
Consolidated copper sales from mines (including volumes from Tenke Fungurume through Nov 16) increased to 1.2 billion pounds of copper in the fourth quarter from 1.1 billion pounds in the year-ago quarter due to higher volumes from Cerro Verde and PT-FI, partly offset by lower sales in North America. Gold sales went up to 405,000 ounces in the reported quarter from 338,000 ounces a year ago. Sales of molybdenum increased to 22 million pounds in the reported quarter from 20 million pounds a year ago.
Full-Year 2016
Freeport reported a loss of $3.16 per share for full-year 2016, narrower than the loss of $11.31 per share reported year ago. Sales increased 1.5% year over year to $14,830 million in 2016.
Operational Update
Consolidated average unit net cash costs (net of by-product credits including Tenke) declined to $1.20 per pound of copper from $1.45 per pound in the year-ago quarter. This is mainly attributable to higher copper sales volumes from Cerro Verde and PT-FI and higher by-product credits.
Average realized price per ounce for gold rose to $1,174 in the quarter from $1,067 a year ago, while average realized price per pound for copper increased to $2.47 from $2.18 in the prior-year quarter.
In the fourth quarter, Freeport concluded the sales of the Deepwater GOM and onshore California oil and gas properties, for $2.6 billion and contingent consideration. In Jan 2017, the company agreed to sell its properties in the Madden area for $20 million cash. The deal is projected to complete in first-quarter 2017.
Post this transaction, Freeport’s portfolio will include oil and natural gas production onshore in South Louisiana and on the GOM Shelf and oil production offshore California. Sales volume from these assets was 1.5 million barrels of oil equivalent (MMBOE) in the fourth quarter.
Realized revenues for oil and gas operations were $39.88 million compared with $37.49 million in the year-ago quarter. Cash production costs totaled $14.62 million in the quarter. Sales volume was 10.5 million MMBOE in the quarter.
Financial Position
Freeporthad cash and cash equivalents of $4,425 million as of Dec 31, 2016, up from the year ago $177 million. Freeport total debt was $16,027 million as of Dec 31, 2016, down from the year ago $20,324 million.
The company’s operating cash flows were $1,135 million in the fourth quarter and capital expenditures totaled $504 million.
In Nov 2016, Freeport concluded its registered at-the-market (ATM) offering of common stock announced in Jul 2016. The company raised $1.5 billion in gross proceeds through the sale of 116.5 million shares of common stock.
Guidance
For 2017, Freeport anticipates consolidated sales to be around 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum. The expected sales are subject to the resumption of concentrate exports by PT-FI in Feb 2017 as well as PT Smelting’s export license being renewed. PT-FI’s share of production is expected to lower by roughly 70 million pounds of copper and 100,000 ounces of gold for each month of delay in obtaining approval to export.
Consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.06 per pound of copper in 2017.
For 2017, capital expenditures are expected to be roughly $1.8 billion, including $1.1 billion for key mining projects.
As previously announced, Freeport plans to strengthen its balance sheet and speed up its debt-reduction initiatives. Freeport expects to generate substantial cash flows in 2017 for debt reduction.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted 51.61% downward due to these changes.
Freeport-McMoran, Inc. Price and Consensus
Freeport-McMoran, Inc. Price and Consensus | Freeport-McMoran, Inc. Quote
VGM Scores
At this time, Freeport-McMoran's stock has a nice Growth score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.