How Does Freeport McMoran Inc Compare to Its Sector Competitors?

August 05, 2022 at 04:00 AM EDT

MarketBeat reported that Freeport McMoran Inc (NYSE: FCX) submitted its earnings card this week. The results were mixed, with the company's net income contracting $840M from $1083M last year. The company's EPS also shrank from 0.57 to 73 cents from the same quarter last year. On a positive note, copper production increased 17% YoY and gold production increased 56% YoY. The company also bought back a large number of shares at $1.8B and increased the total of its share repurchase program to $5B.

With mixed quarterly results but unchanged fundamentals and business outlook, readers may find it helpful to compare the key ratios of FCX to some of its leading competitors.

Valuation

The valuation of FCX comes in above the sector median for several important ratios. The company's FWD non-GAAP P/E ratio is 10.27 while the sector lags behind at 11. Other ratios were stronger for the company including the EV / EBIT at 5.60 compared to 10.46. It should be noted that its P/S ratio is the lowest it has been for the last two years, while its sales per share are significantly higher. This can be explained by the fact that its share price has received a deep discounting YTD, with the company losing -30.67% of its value.

The opinion on Wall St for its EPS, revenue, and ultimately its valuation is bearish over the short term. For the last three months, the company has received 16 down EPS revisions and 13 down revenue revisions. The company is also trading significantly below the MarketBeat consensus price target with a 46.04% upside. Analysts have been generally accurate in determining the estimated consensus price for the stock over the last five years.

FCX’s Excellent Margins and Profitability

One of FCX's biggest strengths is the fact that its margins are significantly higher than its peer companies in the industrials sector. The company's gross profit margin stands at 48.83% while the sector lags at 32.33%. When the company's expenses are factored out, its performance is also very strong. The company's EBITDA margin of 47.30% compares favorably to the sector median of 21.15%.

Other ratios of the company suggest strong internal efficiency in terms of the return for its human and asset capital. The company earns 197.25K per employee while the sector only generates 45.17K. Furthermore, its return on total capital stands at 17.43% while the sector is at just 7.39%.

Dividend Strength

FCX pays a dividend with a high margin of safety. The company's payout ratio is 15% with an FWD yield of 1.05% and a payout of $0.30 on an FWD basis. The company's dividend is relatively weaker than its peers in the sector. Southern Copper (NYSE: SCCO) has a superior yield of 6.46% compared to FCX's yield of 1.05%. Furthermore, this company has a higher FWD dividend rate by a significant margin of $3.00.

FCX meets the sector median for companies in materials when it comes to consecutive years of dividend growth, with the average being two years. Its 3-year dividend growth CAGR of 14.47% also meets the sector median. Investors may benefit from the fact that the company is actively buying back shares along with increasing the rate of its dividend.

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How Does Freeport McMoran Inc Compare to Its Sector Competitors?

Valuation

FCX’s Excellent Margins and Profitability

Dividend Strength

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