As of July 25, 2023, Freeport-McMoRan Inc (FCX, Financial) stock experienced a gain of 4.61%, bringing the share price to $44.04. With a market cap of $63.1 billion and sales of $21.9 billion, this international mining titan has a GF Value of $39.89, suggesting it is fairly valued. The company's Earnings Per Share (EPS) stand at $1.45.
Freeport-McMoRan operates a diverse array of assets with proven and probable mineral reserves of copper, gold, and molybdenum. Its portfolio includes the Grasberg minerals district in Indonesia and mining operations in North and South America, such as the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. The company's key revenue is derived from the sale of copper.
Understanding Freeport-McMoRan's GF Value
The GF Value is a unique metric created by GuruFocus to estimate the intrinsic worth of a stock. It considers historical trading multiples, an adjustment factor based on past performance and growth, and future business performance estimates. If the stock price significantly surpasses the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it falls significantly below, its future return will likely be higher. Given Freeport-McMoRan's current price, the stock is believed to be fairly valued.
As Freeport-McMoRan is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength of Freeport-McMoRan
Investing in companies with poor financial strength exposes investors to a higher risk of permanent capital loss. Therefore, it's vital to review a company's financial strength before deciding to buy its stock. Freeport-McMoRan's cash-to-debt ratio stands at 0.7, which is worse than 75.52% of companies in the Metals & Mining industry. GuruFocus ranks Freeport-McMoRan's overall financial strength at 6 out of 10, suggesting fair financial health.
Profitability of Freeport-McMoRan
Investing in profitable companies is generally less risky, especially those demonstrating consistent profitability over the long term. Freeport-McMoRan has been profitable six times over the past ten years. With an operating margin of 25.14%, it ranks better than 85.15% of companies in the Metals & Mining industry. GuruFocus ranks Freeport-McMoRan's profitability at 7 out of 10, indicating fair profitability.
Growth of Freeport-McMoRan
Growth is a crucial factor in a company's valuation. Freeport-McMoRan's 3-year average annual revenue growth rate is 16.5%, which ranks better than 62.08% of companies in the Metals & Mining industry. Its 3-year average EBITDA growth rate is 58.4%, ranking better than 93.27% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate profitability. Over the past 12 months, Freeport-McMoRan's ROIC was 9.17, while its WACC came in at 13.42.
Conclusion
Overall, Freeport-McMoRan (FCX, Financial) stock appears to be fairly valued. The company's financial condition is fair, and its profitability is also fair. Its growth ranks better than 93.27% of companies in the Metals & Mining industry. To learn more about Freeport-McMoRan stock, check out its 30-Year Financials here.
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