Freeport (FCX) to Report Q3 Earnings: What's in the Offing?
Freeport-McMoRan Inc. FCX is set to release third-quarter 2023 results before the opening bell on Oct 19.
The mining giant’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 10.5%, on average.
Freeport’s third-quarter results are likely to have been aided by improved copper prices. The company is also expected to have gained from its efforts to increase mining rates and lower costs.
The stock has gained 25.8% in the past year compared with the industry’s 30.1% rise.
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Let’s see how things are shaping up for the upcoming announcement.
What do the Estimates Indicate?
For the third quarter of 2023, Freeport expects sales volumes to be 1 billion pounds of copper, 420,000 ounces of gold and 20 million pounds of molybdenum.
The Zacks Consensus Estimate for Freeport’s third-quarter consolidated revenues is currently pegged at $5,547 million, which suggests a year-over-year increase of 10.9%.
A Few Factors to Watch
Freeport’s third-quarter results are expected to have been supported by improved 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.
Copper prices, however, picked up in the third quarter amid expectations that demand in China will improve, backed by stimulus measures from the government. Our estimate for average realized price for copper for the third quarter is pegged at $3.90 per pound compared with $3.84 per pound reported in the prior quarter and $3.50 per pound in the year-ago quarter.
The company is also likely to have benefited from improved costs in the September quarter. It is seeing improving trends for several of its commodity-based input costs and remains focused on managing costs and improve productivity. Our estimate for third-quarter consolidated net cash costs per pound of copper currently stands at $1.61, which indicates a year-over-year decrease of 8%.
Moreover, improved 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 improved volumes in its Grasberg operations in the September quarter on the resumption of shipments following delays associated with the renewal of PT-FI's export license in the second quarter.
The company is also expected to have benefited from higher mining rates in South America. Our estimate for consolidated copper sales for the third quarter is 1,030 million pounds, compared with 1,029 million pounds reported in the prior quarter.
Freeport-McMoRan Inc. Price and EPS Surprise
Freeport-McMoRan Inc. price-eps-surprise | Freeport-McMoRan Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Freeport this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Freeport is -2.45%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at 32 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.
Stocks That Warrant a Look
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:
Element Solutions Inc ESI, scheduled to release earnings on Oct 25, has an Earnings ESP of +1.94% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for ESI’s earnings for the third quarter is currently pegged at 34 cents.
CF Industries Holdings, Inc. CF, slated to release earnings on Nov 1, has an Earnings ESP of +0.73% and carries a Zacks Rank #3 at present.
The consensus mark for CF’s third-quarter earnings is currently pegged at 97 cents.
Kinross Gold Corporation KGC, scheduled to release third-quarter earnings on Nov 8, has an Earnings ESP of +8.70%.
The Zacks Consensus Estimate for Kinross' earnings for the third quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
Element Solutions Inc. (ESI) : Free Stock Analysis Report
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Kinross Gold Corporation (KGC) : Free Stock Analysis Report
