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Freeport (FCX) Reinstates Cash Dividend on Upbeat Outlook

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Freeport-McMoRan Inc.’s (FCX - Free Report) board has reinstated a cash dividend on its common stock and plans to declare a quarterly dividend of 5 cents per share. It expects an initial quarterly dividend to be paid on May 1, 2018.

In December 2015, Freeport suspended its annual common stock dividend of 20 cents per share to save cash amid a weak commodity price environment. The move was aimed at providing an annual cash savings of about $240 million and further increase Freeport’s liquidity during weak market conditions.

The latest move reflects Freeport’s execution of its plan to strengthen its financial position over the last two years.  It is also driven by improved market conditions and a positive outlook for generating strong cash flows.

Freeport expects to continue strengthening its balance sheet and maintain a disciplined investment approach in promising growth projects. Positive market conditions are expected to enable the company to provide additional cash returns to shareholders, which is consistent with Freeport’s long-standing tradition.

Freeport’s shares have moved up 26.2% over the past three months, outperforming the industry’s 6.3% growth.

 


 

Freeport reported strong fourth-quarter results last month. Its adjusted earnings of 51 cents a share for the quarter beat the Zacks Consensus Estimate of 49 cents.

Revenues went up around 15.2% year over year to $5,041 million in the quarter, also surpassing the Zacks Consensus Estimate of $4,811.2 million.

Freeport’s operating cash flows totaled roughly $1.7 billion in the quarter, which includes $0.2 billion in working capital and changes in other tax payments. Cash and cash equivalent also went up around 4.8% year over year to $4,447 million in 2017.

The company had total debt of $13,117 million as of Dec 31, 2017, down from $16,027 million as of Dec 31, 2016.

Freeport anticipates consolidated sales volumes for 2018 to be roughly 3.9 billion pounds of copper, 2.4 million ounces of gold and 91 million pounds of molybdenum, including 1 billion pounds of copper, 675,000 ounces of gold and 24 million pounds of molybdenum for first-quarter 2018.

Freeport expects operating cash flows to exceed $5.8 billion (including $0.3 billion in working capital and other tax payments) for 2018. Moreover, the company had no borrowings with $3.5 billion available under its revolving credit facility at the end of 2017.

 

 

Zacks Rank & Stocks to Consider

Freeport currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Methanex Corporation (MEOH - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and LyondellBasell Industries N.V. (LYB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have soared 33.7% over the last six months.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have moved up 28.3% in a year’s time.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have gained 28.3% over the last six months.

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