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What's in the Cards for Freeport (FCX) This Earnings Season?
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Freeport-McMoRan Inc. (FCX - Free Report) is set to release third-quarter 2017 results ahead of the bell on Oct 25.
Last quarter, the mining company reported a negative earnings surprise of 15%. Freeport missed the Zacks Consensus Estimate in the trailing four quarters with an average negative surprise of 20.1%.
Freeport’s shares have moved up 14.4% in the last three months, underperforming the 16.6% growth recorded by its industry.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Freeport, in July, cut its sales volume expectations for 2017. The company now sees sales volumes to be roughly 3.7 billion pounds of copper (down from 3.9 billion pounds expected earlier), 1.6 million ounces of gold (down from 1.9 million ounces expected earlier) and 93 million pounds of molybdenum, including 940 million pounds of copper, 375,000 ounces of gold and 22 million pounds of molybdenum in third-quarter 2017.
The company assumes average prices of $1,250 per ounce of gold, $2.65 per pound of copper and $7.50 per pound of molybdenum for the remainder of 2017.
The company’s consolidated copper sales volumes in the second quarter were lower than its expectations reflecting the impact of worker absenteeism on mining and milling rates in Indonesia. However, gold sales were higher year over year on higher ore grades from Indonesia.
Copper sales from Freeport’s North American Copper Mines for the third quarter is projected to witness a 13.5% decrease from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at 353 million pounds. The segment’s sales volume also decreased in the previous quarter mainly due to lower ore grades. The trend is expected to continue in the third quarter.
Gold sales from the Indonesia Mining for the third quarter is projected to decline 11.9% from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at 376,000 ounces.
The Zacks Consensus Estimate for copper sales from the company’s South America Mining is expected to be 315 million pounds for the third quarter, reflecting an estimated 8.9% growth on a sequential-comparison basis. The company’s sales were affected in the second quarter due to reduced mining rates, ore grades and recoveries.
Freeport is taking actions to cut mining costs and reduce debt. It is also conducting exploration activities near its existing mines with a focus to expand reserves that will support additional future production capacity. The company’s copper cash costs declined roughly 10% year over year in the second quarter. Freeport’s cost reduction actions should lend support to its margins in the third quarter.
The company is also expected to gain from higher copper prices in the to-be-reported quarter, providing support to its top line. Copper prices have enjoyed a healthy run so far in 2017.
However, Freeport has cut its copper and gold sales volume guidance for 2017, partly due to the impact of the suspension of exports in Indonesia. Freeport reduced its Indonesia workforce by 10% and cut investments in the Grasberg underground expansion to make up for the losses suffered due to the halt of export. Nevertheless, Freeport and the government of Indonesia have agreed on a framework that would allow Freeport to keep operating its Grasberg mine.
Our proven model does not conclusively show that Freeport is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Zacks ESP: Earnings ESP for Freeport for the third quarter is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 30 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
FMC Corporation (FMC - Free Report) has an Earnings ESP of +0.88% and sports a Zacks Rank #1.
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.34% and carries a Zacks Rank #2.
United States Steel Corporation (X - Free Report) has an Earnings ESP of +2.41% and carries a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
What's in the Cards for Freeport (FCX) This Earnings Season?
Freeport-McMoRan Inc. (FCX - Free Report) is set to release third-quarter 2017 results ahead of the bell on Oct 25.
Last quarter, the mining company reported a negative earnings surprise of 15%. Freeport missed the Zacks Consensus Estimate in the trailing four quarters with an average negative surprise of 20.1%.
Freeport’s shares have moved up 14.4% in the last three months, underperforming the 16.6% growth recorded by its industry.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Freeport, in July, cut its sales volume expectations for 2017. The company now sees sales volumes to be roughly 3.7 billion pounds of copper (down from 3.9 billion pounds expected earlier), 1.6 million ounces of gold (down from 1.9 million ounces expected earlier) and 93 million pounds of molybdenum, including 940 million pounds of copper, 375,000 ounces of gold and 22 million pounds of molybdenum in third-quarter 2017.
The company assumes average prices of $1,250 per ounce of gold, $2.65 per pound of copper and $7.50 per pound of molybdenum for the remainder of 2017.
The company’s consolidated copper sales volumes in the second quarter were lower than its expectations reflecting the impact of worker absenteeism on mining and milling rates in Indonesia. However, gold sales were higher year over year on higher ore grades from Indonesia.
Copper sales from Freeport’s North American Copper Mines for the third quarter is projected to witness a 13.5% decrease from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at 353 million pounds. The segment’s sales volume also decreased in the previous quarter mainly due to lower ore grades. The trend is expected to continue in the third quarter.
Gold sales from the Indonesia Mining for the third quarter is projected to decline 11.9% from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at 376,000 ounces.
The Zacks Consensus Estimate for copper sales from the company’s South America Mining is expected to be 315 million pounds for the third quarter, reflecting an estimated 8.9% growth on a sequential-comparison basis. The company’s sales were affected in the second quarter due to reduced mining rates, ore grades and recoveries.
Freeport is taking actions to cut mining costs and reduce debt. It is also conducting exploration activities near its existing mines with a focus to expand reserves that will support additional future production capacity. The company’s copper cash costs declined roughly 10% year over year in the second quarter. Freeport’s cost reduction actions should lend support to its margins in the third quarter.
The company is also expected to gain from higher copper prices in the to-be-reported quarter, providing support to its top line. Copper prices have enjoyed a healthy run so far in 2017.
However, Freeport has cut its copper and gold sales volume guidance for 2017, partly due to the impact of the suspension of exports in Indonesia. Freeport reduced its Indonesia workforce by 10% and cut investments in the Grasberg underground expansion to make up for the losses suffered due to the halt of export. Nevertheless, Freeport and the government of Indonesia have agreed on a framework that would allow Freeport to keep operating its Grasberg mine.
Freeport-McMoran, Inc. Price and EPS Surprise
Freeport-McMoran, Inc. Price and EPS Surprise | Freeport-McMoran, Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Freeport is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Zacks ESP: Earnings ESP for Freeport for the third quarter is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 30 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 #2, which when combined with a 0.00% ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
FMC Corporation (FMC - Free Report) has an Earnings ESP of +0.88% and sports a Zacks Rank #1.
Air Products and Chemicals, Inc. (APD - Free Report) has an Earnings ESP of +0.34% and carries a Zacks Rank #2.
United States Steel Corporation (X - Free Report) has an Earnings ESP of +2.41% and carries a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>