Freeport-McMoRan Stock Gains 20% in a Month: Should You Bet on It Now?

Freeport-McMoRan Inc.’s FCX shares have rallied 19.6% in the past month. It has outperformed the Zacks Mining - Non Ferrous industry’s rise of 11.4% and the S&P 500’s gain of 6.6% over the same period. Its peers, Southern Copper Corporation SCCO and BHP Group Limited BHP, have gained 7.6% and 10.8%, respectively, over the same period. While FCX's first-quarter results showed a decline in both top and bottom line, its guidance showed lower expected unit costs and stronger copper and gold sales volumes for the second quarter. This, coupled with share buyback activities, likely buoyed investor sentiment, leading to share price appreciation.Freeport’s One-Month Price Performance Image Source: Zacks Investment ResearchTechnical indicators show that FCX has been trading below the 200-day simple moving average (SMA) since Nov. 11, 2024. The stock is currently trading above its 50-day SMA. Following a death crossover on Dec. 3, 2024, the 50-day SMA continues to read lower than the 200-day SMA, indicating a bearish trend.FCX Stock Trades Above 50-Day SMA Image Source: Zacks Investment ResearchLet’s take a look at FCX’s fundamentals to better analyze how to play the stock.Freeport’s Growth Actions to Drive Capacity & ProductionFreeport is well-placed with high-quality copper assets and remains focused on strong execution and advancing its organic growth opportunities. At its Cerro Verde operation in Peru, a large-scale concentrator expansion provided incremental annual production of around 600 million pounds of copper and 15 million pounds of molybdenum. It is evaluating a large-scale expansion at El Abra in Chile to define a large sulfide resource that could potentially support a major mill project similar to the large-scale concentrator at Cerro Verde. FCX is also conducting pre-feasibility studies (expected to be completed in 2026) in the Safford/Lone Star operations in Arizona to define a significant sulfide expansion opportunity. It also has expansion opportunities at Bagdad in Arizona to more than double the concentrator capacity of the operation. Also, PT Freeport Indonesia (PT-FI) substantially completed the construction of the new greenfield smelter in Eastern Java during 2024, with an expected start-up in second-quarter 2025, followed by a full ramp-up by the end of 2025. PT-FI is also developing the Kucing Liar ore body within the Grasberg district with a targeted commencement of production by 2030. Gold production also commenced at the new precious metals refinery in late 2024. Plans are in place to transition PT-FI’s existing energy source from coal to natural gas, which is expected to significantly reduce greenhouse gas emissions at Grasberg.FCX’s Solid Financial Health & Capital Discipline Bode WellFCX has a strong liquidity position and generates substantial cash flows, which allow it to finance its growth projects, pay down debt and drive shareholder value. It generated operating cash flows of around $1.1 billion in the first quarter of 2025. It has distributed $5 billion to its shareholders through dividends and share purchases since June 30, 2021. Freeport ended the first quarter with strong liquidity, including $4.4 billion in cash and cash equivalents, $3 billion in availability under the FCX revolving credit facility and $1.5 billion in availability under the PT-FI credit facility.At the end of the first quarter, Freeport had a net debt of $1.5 billion, excluding PTFI’s new downstream processing facilities. Its net debt is below its targeted range of $3-$4 billion. Freeport has a policy of distributing 50% of the available cash to shareholders and the balance to either reduce debt or invest in growth projects.  FCX has no significant debt maturities until 2027. Its long-term debt-to-capitalization is around 23.4% compared with 41.2% for Southern Copper and 26.7% for BHP Group.FCX offers a dividend yield of roughly 0.8% at the current stock price. Its payout ratio is 22% (a ratio below 60% is a good indicator that the dividend will be sustainable), with a five-year annualized dividend growth rate of about 21.8%. Backed by strong financial health, the company's dividend is perceived to be safe and reliable.Retreating Copper Prices Pose Concerns for FCX Copper prices remain volatile this year amid global economic and trade uncertainties. The uncertainties surrounding U.S.-China trade tensions continue to impact prices. Copper prices surged to a new record high of $5.24 per pound in late March as buyers stocked up the commodity amid concerns that President Donald Trump could impose tariffs on copper, leading to a disruption in the global supply chain. However, prices nosedived to around $4.1 per pound in early April amid demand worries due to tariffs, which threatened to cause a broader slowdown globally. Prices of the red metal moved up in late April to roughly $4.9 per pound amid a weakening U.S. dollar on heightened concerns about the prospect of a downturn in the U.S. economy. However, prices have again retreated to around $4.5 per pound lately on weak global demand and increased supply. Weaker global manufacturing activities pose risks to copper demand. Copper demand is also likely to remain under pressure at least through the first half under the weight of tariffs. FCX’s FY25 Earnings Estimates Going DownFreeport’s earnings estimates for 2025 have been going down over the past 60 days. The Zacks Consensus Estimate for 2025 has been revised lower over the same time frame. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Image Source: Zacks Investment ResearchA Look at FCX’s Valuation FCX is currently trading at a forward price/earnings of 20.36X, a roughly 6.9% premium to the industry average of 19.04X. The FCX stock is also trading at a premium to Southern Copper and BHP Group.FCX’s P/E F12M Vs. Industry, SCCO and BHP Image Source: Zacks Investment ResearchFinal Thoughts: Hold Onto FCX StockFCX is poised to gain from progress in expansion activities that will boost production capacity. Robust financial health allows FCX to invest in growth projects and drive shareholder value. Despite these positives, declining earnings estimates and retreating copper prices warrant caution. 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Click to get this free report Freeport-McMoRan Inc. (FCX): Free Stock Analysis Report BHP Group Limited Sponsored ADR (BHP): Free Stock Analysis Report Southern Copper Corporation (SCCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks