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Why Is Freeport-McMoRan (FCX) Down 17.4% Since Last Earnings Report?

Zacks Equity Research
GW Pharmaceuticals PLC (GWPH) closed the most recent trading day at $166.01, moving +1.85% from the previous trading session.

It has been about a month since the last earnings report for Freeport-McMoRan (FCX). Shares have lost about 17.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Freeport-McMoRan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Freeport Misses Earnings and Revenue Estimates in Q1

Freeport logged profits (attributable to common stock) of $31 million or 2 cents per share in first-quarter 2019, down around 96% from $692 million or 47 cents in the year-ago quarter.

The bottom line in the reported quarter excludes net charges of $36 million or 3 cents per share. The results were also hurt by lower copper production and prices.

Barring one-time items, adjusted earnings came in at 5 cents per share, which missed the Zacks Consensus Estimate of 8 cents.

Revenues went down around 22% year over year to $3,792 million. Also, the figure trailed the Zacks Consensus Estimate of $3,817.3 million.

Operational Update

Copper production fell around 18% year over year to 780 million pounds in the reported quarter.

Consolidated sales from mines were 784 million pounds of copper, 242,000 ounces of gold and 22 million pounds of molybdenum. Copper sales volume fell 21% year over year.

Consolidated average unit net cash costs of $1.78 per pound of copper for the first quarter were higher than 98 cents reported in the year-ago quarter.

Average realized price for copper was $2.90 per pound, down around 7% from $3.11 a year ago. Average realized price per ounce for gold fell around 2% to $1,291 from $1,312 in the year-ago quarter. Average realized price per pound for molybdenum was $12.69, up 6% year over year.

Financial Position

Cash and cash equivalents at the end of the quarter were $2,833 million, down roughly 23% year over year. The company had long-term debt of $9.9 billion, down around 11% year over year.

Freeport’s operating cash flows were $534 million in the quarter.

Guidance

Freeport anticipates consolidated sales volumes for 2019 to be roughly 3.3 billion pounds of copper, 0.8 million ounces of gold and 94 million pounds of molybdenum, including 800 million pounds of copper, 265,000 ounces of gold and 25 million pounds of molybdenum for second-quarter 2019.

For 2019, the company expects operating cash flows to be roughly $2.3 billion. Capital expenditures are expected to be around $2.5 billion, which includes $1.5 billion for major mining projects mainly related to underground development in Grasberg, Indonesia, and development of the Lone Star copper leach project.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -29.87% due to these changes.

VGM Scores

Currently, Freeport-McMoRan has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Freeport-McMoRan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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