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Freeport-McMoran (FCX) Down 11.9% 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 11.9% 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 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 Q1 Earnings, Revenues Miss Estimates
Freeport reported net income (attributable to common stock) of $0.16 per share for first-quarter 2017 against the year-ago loss of $3.35 per share.
Barring one-time items, adjusted earnings were $0.15 a share in the first quarter, missing the Zacks Consensus Estimate of $0.17.
Revenues grew around 3% year over year to $3,341 million in the reported quarter but missed the Zacks Consensus Estimate of $3,505 million.
Consolidated sales from mines totaled 809 million pounds of copper, 182,000 ounces of gold and 24 million pounds of molybdenum for the reported quarter. Sales volumes have been impacted by regulatory restrictions on PT-FI’s concentrate exports since mid-Jan 2017, resulting in the deferral of roughly 190 million pounds of copper and 280,000 ounces of gold in first-quarter 2017. However, PT-FI's concentrate exports resumed on Apr 21, 2017.
Operational Update
Consolidated average unit net cash costs rose to $1.39 per pound of copper from $1.38 in the year-ago quarter. This is mainly attributable to lower sales volumes, partly offset by higher by-product credits.
Average realized price per ounce for gold rose to $1,229 in the quarter from $1,228 a year ago, while average realized price per pound for molybdenum was $8.71 per pound.
Mining Update
North America Copper Mines: Copper sales decreased 25.4% year over year to 375 million pounds mainly due to lower ore grades and mining rates, timing of shipments, and the sale of a portion of the company’s interest in Morenci. Production fell 19.5% year over year to 392 million pounds in the reported quarter.
Freeport expects copper sales from North America to be 1.5 billion pounds in 2017, versus 1.8 billion pounds in 2015.
South America Mining: Copper sales of 309 million pounds declined 9.2% from the year-ago quarter owing to unusually heavy rainfall and 21-day labor strike at Cerro Verde's expanded operations.
South America mining is anticipated to report sales of around 1.2 billion pounds of copper in 2017, compared with sales of 1.3 billion pounds in 2016.
Indonesia Mining: Copper sales of 125 million pounds declined 28.2% from 174 million pounds the year-ago quarter. The results reflect the impact of regulatory restrictions on PT-FI's concentrate exports beginning on Jan 12, 2017, and a six-week temporary shutdown at PT Smelting, which began on Jan 19, 2017.
Gold sales decreased 9.2% to 177,000 ounces and production rose 30.3% year over year to 232,000 ounces in the reported quarter.
Sales from Indonesia mining are anticipated to be about 1.1 billion pounds of copper and 1.9 million ounces of gold for 2017.
Molybdenum Mines: Molybdenum production was 8 million pounds in the first quarter compared with 7 million pounds in the year-ago quarter.
Financial Position
Freeport had operating cash flows of roughly $792 million, which includes $178 million in working capital and changes in other tax payments.
Freeport had long-term debt of $13,135 million as of Mar 31, 2017, down from $14,795 million as of Dec 31, 2016.
Guidance
Sales volumes for the year 2017 are now expected to be roughly 3.9 billion pounds of copper (down from 4.1 billion pounds expected earlier), 1.9 million ounces of gold (down from 2.2 million ounces expected earlier), and 93 million pounds of molybdenum, including 1 billion pounds of copper, 440,000 ounces of gold and 24 million pounds of molybdenum in second-quarter 2017. Estimated sales volumes assume normal operating rates at PT-FI beginning mid-Apr 2017.
The company assumes average prices of $1,250 per ounce of gold and $9.00 per pound of molybdenum for the remainder of 2017.
The current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.08 per pound of copper for 2017. The impact of price changes on consolidated unit net cash costs would approximate $0.02 per pound for each $50 per ounce change in the average price of gold for the balance of 2017 and $0.02 per pound for each $2 per pound change in the average price of molybdenum for the balance of 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has increased 9.7% due to these changes.
At this time, Freeport-McMoran's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. 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 trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Freeport-McMoran (FCX) Down 11.9% 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 11.9% 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 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 Q1 Earnings, Revenues Miss Estimates
Freeport reported net income (attributable to common stock) of $0.16 per share for first-quarter 2017 against the year-ago loss of $3.35 per share.
Barring one-time items, adjusted earnings were $0.15 a share in the first quarter, missing the Zacks Consensus Estimate of $0.17.
Revenues grew around 3% year over year to $3,341 million in the reported quarter but missed the Zacks Consensus Estimate of $3,505 million.
Consolidated sales from mines totaled 809 million pounds of copper, 182,000 ounces of gold and 24 million pounds of molybdenum for the reported quarter. Sales volumes have been impacted by regulatory restrictions on PT-FI’s concentrate exports since mid-Jan 2017, resulting in the deferral of roughly 190 million pounds of copper and 280,000 ounces of gold in first-quarter 2017. However, PT-FI's concentrate exports resumed on Apr 21, 2017.
Operational Update
Consolidated average unit net cash costs rose to $1.39 per pound of copper from $1.38 in the year-ago quarter. This is mainly attributable to lower sales volumes, partly offset by higher by-product credits.
Average realized price per ounce for gold rose to $1,229 in the quarter from $1,228 a year ago, while average realized price per pound for molybdenum was $8.71 per pound.
Mining Update
North America Copper Mines: Copper sales decreased 25.4% year over year to 375 million pounds mainly due to lower ore grades and mining rates, timing of shipments, and the sale of a portion of the company’s interest in Morenci. Production fell 19.5% year over year to 392 million pounds in the reported quarter.
Freeport expects copper sales from North America to be 1.5 billion pounds in 2017, versus 1.8 billion pounds in 2015.
South America Mining: Copper sales of 309 million pounds declined 9.2% from the year-ago quarter owing to unusually heavy rainfall and 21-day labor strike at Cerro Verde's expanded operations.
South America mining is anticipated to report sales of around 1.2 billion pounds of copper in 2017, compared with sales of 1.3 billion pounds in 2016.
Indonesia Mining: Copper sales of 125 million pounds declined 28.2% from 174 million pounds the year-ago quarter. The results reflect the impact of regulatory restrictions on PT-FI's concentrate exports beginning on Jan 12, 2017, and a six-week temporary shutdown at PT Smelting, which began on Jan 19, 2017.
Gold sales decreased 9.2% to 177,000 ounces and production rose 30.3% year over year to 232,000 ounces in the reported quarter.
Sales from Indonesia mining are anticipated to be about 1.1 billion pounds of copper and 1.9 million ounces of gold for 2017.
Molybdenum Mines: Molybdenum production was 8 million pounds in the first quarter compared with 7 million pounds in the year-ago quarter.
Financial Position
Freeport had operating cash flows of roughly $792 million, which includes $178 million in working capital and changes in other tax payments.
Freeport had long-term debt of $13,135 million as of Mar 31, 2017, down from $14,795 million as of Dec 31, 2016.
Guidance
Sales volumes for the year 2017 are now expected to be roughly 3.9 billion pounds of copper (down from 4.1 billion pounds expected earlier), 1.9 million ounces of gold (down from 2.2 million ounces expected earlier), and 93 million pounds of molybdenum, including 1 billion pounds of copper, 440,000 ounces of gold and 24 million pounds of molybdenum in second-quarter 2017. Estimated sales volumes assume normal operating rates at PT-FI beginning mid-Apr 2017.
The company assumes average prices of $1,250 per ounce of gold and $9.00 per pound of molybdenum for the remainder of 2017.
The current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.08 per pound of copper for 2017. The impact of price changes on consolidated unit net cash costs would approximate $0.02 per pound for each $50 per ounce change in the average price of gold for the balance of 2017 and $0.02 per pound for each $2 per pound change in the average price of molybdenum for the balance of 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has increased 9.7% 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 strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. 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 trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.