Earnings Preview: Freeport-McMoRan - Analyst Blog
17 Januar 2012 - 9:45AM
Zacks
Freeport-McMoRan Copper
& Gold (FCX) is scheduled to report its fourth
quarter and full year 2011 results before the market opens on
Thursday, January 19. The Zacks Consensus Estimate for the quarter
is 69 cents per share, representing an estimated year-over-year
slump of about 57.96%. For the full year, the Zacks Consensus
Estimate is $4.87 per share, up roughly 5.12% from the previous
year.
We do not expect Freeport to report
extraordinary result this quarter given the weakness in the
economy, the increase in raw material prices and the prolonged
strike at PT Freeport Indonesia.
Previous Quarter
Performance
Freeport’s third-quarter earnings
per share of $1.10 missed the Zacks Consensus Estimate by 2 cents
per share.
Revenues in the quarter were $5.20
billion, surpassing the Zacks Consensus Estimate of $5.01 billion.
Consolidated sales from mines totaled 947 million pounds of copper,
409,000 ounces of gold and 19 million pounds of molybdenum compared
with 1.1 billion pounds of copper, 497,000 ounces of gold and 17
million pounds of molybdenum in the second quarter of 2010.
Earnings Estimate Revisions
- Overview
Ahead of the earnings release, the
Zacks Consensus Estimates for the fourth quarter and full year are
slightly down in the last 30 days. However, in the last 7 days, the
Zacks Consensus Estimate for the fourth quarter and full year has
gone up, due to the end of the prolonged strike and the expansion
of reserves to support the development of additional future
production capacity in large minerals districts.
Agreement of Estimate
Revisions
Of the 17 analysts covering the
stock, 2 have increased their estimates for the fourth quarter,
while only one has moved in the opposite direction over the last 7
days.
Moreover, for full-year 2011, there
are 2 upward estimate revisions and 1 downward movement. For
full-year 2012, 2 downward revisions were witnessed while none
moved up over the last 7 days.
Magnitude of Estimate
Revisions
The Zacks Consensus Estimates for
the fourth quarter and full-year 2011 spiked over the last 7 days.
The Zacks Consensus Estimate for the fourth quarter increased from
earnings per share of 67 cents to 69 cents. For full-year 2011, the
estimate increased by 1 cent to $4.87 per share.
Earnings
Surprise
Freeport’s performance has been
stable over the trailing four quarters with respect to earnings
surprises. The average earnings surprise was a positive 11.6%. This
implies that the company has beaten the Zacks Consensus Estimate by
the same magnitude over the last four quarters.
Our Viewpoint
Freeport is conducting exploration
activities near its existing mines with a focus on opportunities to
expand reserves that will support the development of additional
future production capacity in the large minerals districts, where
it currently operates.
We believe the favorable
exploration results indicate opportunities for significant future
potential reserve additions in North and South America and in the
TenkeFungurume minerals district. The drilling data in North
America continues to indicate the potential for expanded sulfide
production.
Going by estimate revision trends
and the magnitude of revision, there is admittedly a marginal
downward pressure on the shares over the near term.
Freeport maintains a Zacks #3 Rank,
which translates into a short-term Hold rating. However,
considering the company’s business model and fundamentals, we have
a long-term Neutral recommendation on the stock.
The company faces stiff competition
from Newmont Mining Corp. (NEM) and
Southern Copper Corp. (SCCO).
FREEPT MC COP-B (FCX): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
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