Neutral on Freeport-McMoRan - Analyst Blog
03 Februar 2012 - 4:41PM
Zacks
We maintain our Neutral recommendation on
Freeport-McMoRan Copper & Gold (FCX). The
company is engaged in mineral exploration and development; mining
and milling of copper, gold, molybdenum and silver; as well as
smelting and refining of copper concentrates.
Recently, Freeport announced its fourth quarter and fiscal 2011
results. The company reported a profit of $460 million or 67 cents
per share in the fourth quarter of 2011 versus $1.5 billion or
$1.63 in the same quarter of 2010. The profit, however, surpassed
the Zacks Consensus Estimate by 3 cents.
Revenue was $4.2 billion versus $5.6 billion in the prior-year
quarter, surpassing the Zacks Consensus Estimate of $3.8 billion.
The company’s capital expenditures are expected to reach $4.0
billion for 2012, including $2.4 billion for major projects and
$1.6 billion for sustaining capital.
Freeport is conducting exploration activities near its existing
mines with a focus on opportun ities to expand reserves that will
support the development of additional future production capacity in
the large minerals districts, where it currently operates.
Favorable exploration results indicate opportunities for
significant future potential reserve additions in North and South
America and in the Tenke Fungurume minerals district.
The drilling data in North America continues to reflect the
potential for expanded sulfide production. Exploration spending for
2012 is expected to approximate $275 million compared with $221
million in 2011. Exploration activities will continue to focus
primarily on the potential for future reserve additions in
Freeport’s existing minerals districts.
Freeport has a strong balance sheet. As of December 31, 2011,
the company had $4.8 billion in consolidated cash and cash
equivalents and $3.5 billion in total debt. During 2011, Freeport
repaid $1.2 billion in debt and paid common stock dividends
totaling $1.4 billion ($1.50 per common share). The company has no
significant debt maturities in the near term; however, it may
consider additional opportunities to prepay debt in advance of
scheduled maturities.
However, the prolonged strike at the Grasberg mine has affected
production tremendously. Freeport is also conducting exploration
activities near its existing mines while focusing on opportunities
to expand reserves that will support the development of additional
future production capacity in the large minerals districts, where
it currently operates.
The company faces stiff competition from Newmont Mining
Corp. (NEM) and Southern Copper Corp.
(SCCO). It currently retains Zacks #3 Rank on its stock, which
translates into a short-term Hold rating.
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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