Freeport-McMoRan (NYSE:FCX) Full Year 2023 ResultsKey Financial Results

• Revenue: US$22.9b (flat on FY 2022).

• Net income: US$1.85b (down 47% from FY 2022).

• Profit margin: 8.1% (down from 15% in FY 2022).

• EPS: US$1.28 (down from US$2.40 in FY 2022).

earnings-and-revenue-growth

All figures shown in the chart above are for the trailing 12 month (TTM) period

Freeport-McMoRan Meets Expectations

Revenue was in line with analyst estimates. Earnings per share (EPS) was also in line with analyst expectations.

Looking ahead, revenue is forecast to grow 4.4% p.a. on average during the next 3 years, compared to a 4.1% growth forecast for the Metals and Mining industry in the US.

Performance of the American Metals and Mining industry.

The company's shares are up 3.9% from a week ago.

Risk Analysis

What about risks? Every company has them, and we've spotted 1 warning sign for Freeport-McMoRan you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Participants

Kathleen Lynne Quirk; President & Director; Freeport-McMoRan Inc.

Mark J. Johnson; President & COO of Freeport-McMoRan Indonesia; Freeport-McMoRan Inc.

Richard C. Adkerson; Chairman & CEO; Freeport-McMoRan Inc.

Alan Henri Spence; Research Analyst; BNP Paribas Exane, Research Division

Alexander Nicholas Hacking; Director & Head of Americas Metals and Mining Sector; Citigroup Inc., Research Division

Brian MacArthur; MD & Head of Mining Research; Raymond James Ltd., Research Division

Carlos De Alba; Equity Analyst; Morgan Stanley, Research Division

Christopher LaFemina; Senior Equity Research Analyst; Jefferies LLC, Research Division

Edward Goldsmith; Research Associate; Deutsche Bank AG, Research Division

Lawson Winder; VP & Research Analyst; BofA Securities, Research Division

Michael Stephan Dudas; Partner; Vertical Research Partners, LLC

Orest Wowkodaw; MD & Senior Equity Research Analyst of Base Metals; Scotiabank Global Banking and Markets, Research Division

William Chapman Peterson; Analyst; JPMorgan Chase & Co, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Fourth Quarter Conference Call. (Operator Instructions). I would now like to turn the conference over to Ms. Kathleen Quirk, President. Please go ahead, ma'am.

Kathleen Lynne Quirk

Thank you, and good morning. Welcome to the Freeport-McMoRan conference call. Earlier this morning, we reported our fourth quarter and full year 2023 operating and financial results, and a copy of today's press release, the supplemental schedules and slides are available on our website at fcx.com. Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website home page and clicking on the webcast link for the conference call. In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today. Before we begin our comments, I'd like to remind everyone, today's press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and that actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings. Also on the call with me today are Richard Adkerson, our Chairman and CEO; Maree Robertson, our Chief Financial Officer; Josh Olmsted, our COO of the Americas; Mark Johnson, Operating Officer for Indonesia; Mike Kendrick, who runs our Molybdenum business; and Steve Higgins, who's our Chief Administrative Officer. We'll start the call with some opening comments from Richard and then we'll go through the slide presentation materials and then open up the call for questions. So I'll turn it over to Richard.

Richard C. Adkerson

Okay. Good morning, everyone. As you can see, our first quarter was really a sound quarter and outstanding in several respects in terms of our operations. It was really led by PT-FI during the whole year of 2023. We began our ramp-up in 2019 of the underground, and now we are fully operationally and the team has been setting records consistently out there and it just outperformed for the full year and faces some really challenges, which is just part of that business. But I'm very proud of our PT-FI team at job site in Jakarta. We are making great progress in fulfilling our 2018 commitment to the government to invest in down streaming and the copper concentrate business. In December, I was there for the inauguration of the expansion of the older smelter, PT Smelting, with President, Joko Widodo, and that was a good event. And then with our new smelter at Manyar in Eastern Java, we reached an important 90% milestone at the end of the year, and we're progressing for physical completion of the smelter and ramping it up on schedule in 2024. A couple of words about the markets. It continues to be the micro versus macro story. Notably, in 2023, the macro factors strengthen notably, 2023 had long been forecasted to be a year of surplus because of new mines coming on stream, but it ended up being a small deficit, and at the same time there were stronger-than-expected demand for copper in the United States and in China in spite all the issues of China's property business, other sectors created notable growth for copper in China. Then there were the supply shortfalls throughout the industry for some significant mines and these for range of factors that are kind of common to our business. The copper business — mining business is a tough business, but it was political issues in some countries, community issues, and then operating issues. As a result of all that, inventories of copper around the world are at historically low levels and the inventory levels are really inconsistent with the current copper price. The copper price clearly been driven by macroeconomic factors. The currency, the strong U.S. dollar carryover effects of inflation, government fiscal policies. And there are concerns about economies in China and Europe. But if the macro outlook — and I'll just say when the macro outlook improves, watch out for the copper price. Looking ahead, the world is going to need significantly more copper in the future for a variety of factors. The world is becoming increasingly electrified, and that's what copper is used for. And it's at a time when the industry is simply not investing to grow production, that the outlook indicates that will be required for economic, operational and resource nationalism, a series of factors, but the facts are there's an outlook for strong demand and supply challenges. That's why I'm so personally confident about where Freeport is positioned and pleased with it. We have high-volume existing production that's sustainable. We have large sustainable reserves and resources. We have growth opportunities that we will pursue prudently from this really exciting Leaching initiatives that Kathleen will be talking about, and from brownfield expansions of our existing ore bodies. Before turning over to Kathleen, I just want to send a note of condolences to our friends at Rio Tinto. You may have seen the news, but they had a (inaudible) to go down in Canada heading to their diamond operations there. Rio has been a special part of Freeport's history, of course, through our partners for many years at Grasberg. I've worked with 6, 7, 8 CEOs of my career, some of my closest colleagues have been with that company. And the toughest part of being a CEO is to lose people, and I'm just so sad to hear this news and the whole Freeport families' heart goes out to our friends at Rio. With that, Kathleen, I'll turn it over to you.

Kathleen Lynne Quirk

Okay. Thank you, Richard, and I'll be covering the presentation materials, starting with Slide 3. Our achievements for 2023 are summarized here. Our sharp focus on executing our plans in an effective, safe, and responsible manner, managing the controllable drivers and navigating challenges successfully all translated into solid operating results over the year. A big highlight for the year was the outstanding progress in Indonesia, where we grew production levels for the fourth year in a row. We posted several new operating records and we continue to enhance values for this large-scale, low-cost, and [long-last] resource. We were also successful in reaching several milestones during the year, including our — reaching our target run rate for incremental leach production in the Americas, enhancing optionality in the Americas for our brownfield growth projects, and reaching our targeted 90% completion milestone for the Indonesian smelter project by the end of 2023. As a leader in the industry, we were one of the first companies to have all of our operating sites certified under the Copper and Molybdenum Marks, and this demonstrates our performance and commitment to responsible mining practices. We ended the year 2023 in a strong financial position, a positive outlook, and as we work together to enhance long-term value for shareholders. On Slide 4, we summarize the key results for 2023 compared with historical levels. After growing our volumes from 2020 to 2021 and 2022, we were able to (inaudible) production of copper in 2023 despite a challenging environment for copper supplies, Richard discussed, and we reported another year of growth in gold production. Our unit net cash costs for 2023 were above the 2022 level as expected, but they came in very close to our original guidance for the year. We're continuing to actively manage costs and productivity initiatives to address cost inflation, and we'll be working on that as we go forward. For the year 2023, we generated strong EBITDA of $8.8 billion and operating cash flows of over $5 billion. We're continuing to carefully manage not only our operating costs but also capital expenditures with a priority on spending on projects to sustain production, improve efficiencies and enhance optionality for future development options with attractive rates of return. During 2023, we returned $860 million to shareholders, bringing the total shareholder returns to $3.8 billion since we implemented our performance-based payout framework in 2021. We ended the year with net debt of approximately $800 million, and that excludes the smelter-related debt, which is being financed separately. I will move to Slide 5 and talk about the fourth quarter. During the fourth quarter, our sales were 3% above our estimates going into the quarter. Our gold production was also very strong, but our shipments have grown in the fourth quarter was slightly below the previous estimates, and that reflected timing in these shipments we made in the first quarter. Unit net cash cost averaged $1.52 per pound in the fourth quarter, that was better than our guidance of $1.58 per pound, and slightly below the year ago period. Notably, unit net cash costs Indonesia were 0 in the fourth quarter, $0.00 per pound, meaning our gold credits completely offset the production cost for copper. Average capital realizations in the fourth quarter were $3.81 per pound, and we generated $2.3 billion of EBITDA and operating cash flows of $1.3 billion. If you go around the world and talk a little bit about our various operations in the fourth quarter. In the U.S., we made progress in increasing our mining rates. That's been a big focus during the quarter with a 9% increase over the year ago quarter. We have a continued focus on improving our asset efficiencies and workforce experience levels. These are important initiatives as we seek to increase productivities to combat lower ore grades. Our innovative leach initiatives met expectations and also helped to mitigate the impact of lower ore grades in the U.S. Labor market conditions in the U.S. continue to be tight. We're taking steps to expand housing options in our remote locations for recruiting and retention, and we're also continuing to pursue technology solutions to enhance productivity. Conversion of the Bagdad truck fleet to fully autonomous is advancing, and we're targeting to commence the transition in the second half of next year. In South America, our ore milled was sustained above 400,000 metric tons per day, and our ore stacking rates increased at a (inaudible). Mill recoveries at Cerro Verde in the fourth quarter of 2023 were below the year ago level because of the material types that we're mining in the fourth quarter. This is continuing for mining phases in early 2024, and we're working to optimize performance. As Richard discussed, the fourth quarter performance in Indonesia was exceptional. Underground ore mined averaged over 214,000 tons per day, and that was 8% higher than the year ago period combined with strong wage and recoveries, our copper and gold production in the fourth quarter was over 20% higher than last year's fourth quarter. We completed the installation of a new SAG mill at PT-FI in December, and that will provide additional opportunities for us going forward. And the team is just doing outstanding work, sustaining and optimizing value from this large resource position. We thought it's good to look back in history of how the underground transition has gone, Slide 6 covers this. We show a history of the progression of the transition. As Richard mentioned, we stopped mining from the surface in the Grasberg Open Pit at the end of 2019, transition to fully underground operations beginning in 2020. We have a long history in Indonesia, spanning over 56 years, and a great track record for building value over many years for all stakeholders. We're extremely proud of the team's execution, our transition. We now have the world's largest underground mining complex, and it's been developed in a modern, efficient operation. The Grasberg is the world's second largest copper mine and one of the largest gold mines even though gold is a byproduct. High grades of both copper and gold make it one of the lowest cost operations in the world as well. This took a lot of planning. We began planning for this underground era over 25 years ago and commenced development activities in 2004. And as you can see from the graph, the project is performing exceptionally well and generating strong margins and cash flows. As we look forward, we're continuing to make investments in this resource to enhance value and sustain long-term performance. We're working on the extension of our operating rights beyond 2041 and increasingly confident about securing our long-term rights. And that would extend the lives of our resources and open a whole new set of opportunities for this district. Richard touched on the smelter progress, and this is really important for us in terms of securing long-term rights. We reached 2 important milestones on these initiatives in 2023. The projects include a new greenfield smelter in East Java, and the expansion of our nearby existing smelter, which was developed in the late 1990s. Richard mentioned, we celebrated in December, the completion of the expansion project with the Indonesian government and our Japanese partner. And we also reached a really important milestone on progress of the greenfield project with completion progress achieving the target we set with the government of over 90% by the end of December. We posted a video this morning on our website that shows the Greenfield Smelter project. You can see all the progress that's been made and you can see the sheer size and scale of this impressive facility, and I hope you'll have a chance to look at it. Both projects have been executed very efficiently in the context of a challenging market for major project development. The internal team that we have working on this project, together with our contractor, have done an outstanding job containing costs and maintaining schedules. We're working to complete the construction by the end of May of 2024 and to start commissioning and conduct the ramp-up period over the balance of 2024. This is a big deal for us. It's not very frequent that you see new smelters starting up, and we've done a lot of planning going into the start-up process. Our teams are well-prepared and really highly motivated to achieve a safe, efficient, and timely start-up in 2024. Turning to the U.S. and the Americas where we've got an important leach initiative ongoing, we achieved our targeted run rate where we were targeting approximately 200 million pounds of copper per year by the end of 2023. This is an exciting and innovative initiative involving new operating practices being applied to our traditional leach operations and really working to get more out of our massive stockpiles that contain material that has in place in prior years. Look, remember, as we've talked about on prior calls, the cost of this incremental cost of production is lower from both an operating and capital perspective because we're targeting material where the material has already been mined, and we're largely using existing infrastructure to extract the new metal. The first phase of this initiative essentially involved 4 basic categories of actions: One, as we've talked about previously, we commenced the process to install coverage over the stockpiles to increase heat retention and drive higher recoveries. Two, we gained access to areas in the stockpiles that have not previously had the benefit of leach solution and this initiative we call Leach Everywhere. Three, we started using drilling techniques to specifically target areas within the stockpile where solution was lacking. And importantly, the fourth area is developing more sophisticated models using data analytics to optimize the application of solutions to improve performance and using this data as a valuable tool in getting work in all the areas of initiatives in this important program. As we look at where the impacts came from, you can see most of the incremental production was from our Morenci mine. That mine has a very long history of leaching operations. We have a massive set of stockpiles there and a very large opportunity set at Morenci. As we go to Phase 2 of the project, where we are working to essentially double the initial target from 200 million pounds to 400 million pounds, we really are looking at just scaling these practices further. And by continuing to scale the operating practices, we think we can double the initial target over the next 2 to 3 years. And as we continue to work to sustain the production we can add to our reserve position, and that's a real focus of ours, to capitalize the progress into long-term reserve additions. The first and second phase of this initiative is really operationally driven using existing technologies. The third phase, which is also very exciting is really the work that we and others are doing to advance the leaching process using different additives and different techniques, and this is more of an R&D effort, but it's being advanced. We're commencing a large-scale testing activity to evaluate the response to new additives and we're also evaluating opportunities to get more heat retention in our stockpiles and heat really is an enabler of more copper production and higher recoveries. In aggregate, these initiatives have the potential to reach 800 million pounds per annum, and that's equivalent to a large-scale copper mine. And notably, it's got very low capital intensity, and we've seen how much — how much new copper mines cost. This is a very low capital intensity, low incremental operating costs, and a low carbon footprint. The value potential here is very attractive, particularly for a company like Freeport to take advantage of given our large quantities of suitable material that we previously mined. Richard touched on copper markets earlier, and we have some information on Slide 9. Physical markets have continued to tighten, inventories have declined and demand is growing. Despite the weak sentiment over the last several quarters on the Chinese economy and property sector, the reality is that China's copper consumption was strong throughout 2023. And this reflected the intensity of copper use and energy infrastructure, renewables, and electric vehicles. In the U.S., our customers continue to report solid demand for copper with growth in several sectors. At the same time, supply disruption increased meaningfully in recent months. In total, near-term supplies of copper have been reduced by over 700,000 tons in a very short period of time. The market was previously expecting that 2024 would be a small surplus market and in turning to deficit beginning in 2025 time frame and continuing for some time. With the recent supply disruptions and continued demand growth, the deficit market has been advanced into 2024, setting up for tight market conditions in the near term. While the fundamentals have become significantly more positive, macro conditions tied to U.S. dollar strength and sentiment about China have influenced copper price movements. Richard mentioned, we believe the fundamentals of the market will lead to significantly higher copper prices in the future, and that's supported by anticipated strong growth in demand associated with secular trends, and the global economy's requirements for copper. Also, the realities of the cost and time frames required for new supply development is an important factor when we look at the fundamental outlook for copper. Turning into how Freeport is positioning to try to grow production in response to this market demand, really look at the sizable on Slide 10. We really look at the sizable reserve position of copper and even larger resource position that Freeport has that supports a pipeline for future growth options. Within the portfolio, we look for opportunities to get more out of what we have through innovation and operating efficiencies. We look for investments and projects, so we have large resource positions and where we have established track records and opportunities to launch the existing infrastructure, our people and capabilities, all with the drive focus on increasing value. We categorized on Slide 10, our near-term, medium-term, and longer-term development options. And we've outlined identified projects totaling about 1.7 billion pounds of copper in the Americas. And we've also highlighted on the slide the ongoing development of the Kucing Liar project in Indonesia which is expected to support long-term production profiles in the Grasberg District. The opportunities that are shown on the slide in the 2- to 3-year category, they center around scaling our rich initiatives and achieving incremental production from our operational improvement projects. Together, the potential from these opportunities total 400 million pounds of incremental copper per annum and do not require significant investment or long lead times. We discussed earlier that the leach projects, but we're also dedicating significant resources to enhancing productivity and asset efficiencies, rebuilding the experience of our workforce given the large number of new hires in recent years, and utilizing new technologies and automation to restore and improve on productivity metrics that weakened somewhat during the pandemic. As we indicated, we completed the feasibility study late in the year 2023, to evaluate a project to more than double the size of our Bagdad operation in Northwest Arizona. The reserves at Bagdad are span for decades, and they support expansion of infrastructure at the site to bring value forward. The incremental capital cost to build a new concentrator and support infrastructure for significantly higher mining and milling rates is on the order of $3.5 billion and an expanded operation would not only substantially increase copper production but would produce economies of scale and reduce unit costs. The project does not require major permitting and it's relatively straightforward. But given the tight labor market conditions and general market factors, we're not making a decision right now on the timing of the project. We'll continue to evaluate the timing of when we would go forward. But we are taking steps now to enhance optionality for the future by making some investments in the autonomous haulage for our mining operations, making some investments in housing, and also advancing investments in the tailings infrastructure that will put us in a position when we make the decision, we could get the project online within a few years. In Chile, at El Abra, we talked about this. Our resource is very large. We have a major opportunity to install a new concentrator on the size of — on the order of magnitude size of the concentrator we added at Cerro Verde in 2015. We'll continue to work to retest the economics and updating our project capital costs in light of recent capital cost experience of other large projects and in parallel, we're starting work in preparation for an environmental impact statement that would give us the ability to advance the project and provide optionality for future development. We mentioned Kucing Liar development project in the Grasberg district, which we've initiated development on. This is a multiyear development project, and it's proceeding on schedule, and we expect to commenced production by 2030, ramping up to over 500 million pounds of copper and over 500,000 ounces of gold. We're also conducting additional exploration in the Grasberg district, where we have identified potential — we've got a big potential below our Deep MLZ ore body and we expect to have additional opportunities in the future at Grasberg. We have a major opportunity in the U.S. at the Safford/Lone Star District. We've identified a significant resource there. This year, we're going to work to complete metallurgical testing, and mine planning, and start our prefeasibility study to assess future development options there. We continue to see this district as one that has big potential and potentially being a cornerstone asset in the U.S. on adjacent to the Morenci operations. In Indonesia, we're focused on this extension of our rights beyond 2041, because that would open up a substantial opportunity for reserve and resource expansion and a continuation of the large-scale mining in one of the world's largest and highest grade copper and gold mining districts. We're in a really strong position to continue our leadership role in supplying copper to a world with growing requirements. We're going to continue to be disciplined in our approach and focused on executing projects where we can create value to shareholders. With a lot of history in developing big projects, we included a slide on Page 11 that you can take a look at a key strength of our company is the ability to execute projects successfully. This does not come easy. It requires a focused hands-on approach and we've got a business model of pairing internal resources with trusted contractors, and that has served us well. We've listed several projects that we've led over the years, and we've developed very complex projects around the world. We're going to continue to approach future projects with the same level of preparedness rigor and a focus on execution. As we look at 2024, turning to Slide 12, we've got our focus area is listed here. And first and foremost, we remain committed to safe and reliable execution of our operating plans across the global business. Seems like a simple thing, but this involves discipline and hard work day in and day out. We discussed our focus on enhancing performance in the U.S. through our leach initiatives and productivity. This is particularly important to mitigate low grades and to manage costs, which experienced higher inflation in recent years. We're going to have another big year in Indonesia. A key priority for us is to complete the smelter and ramp up safely and efficiently and to finalize an agreement for extension of our long-term operating rights. We're also very focused on enhancing optionality, definition, and the value of our embedded growth options. On Slide 13, we show, as usual, we show a 3-year outlook for sales volumes of copper, gold, and molybdenum. For 2024, the copper sales volumes are slightly reduced, less than 2% below our prior estimate and are now expected to be similar to 2023 levels. The gold sales are 10% higher than our prior estimate and higher than they were in 2023. Buyer sales in Indonesia for the year of 2024 offset by slightly lower sales from the Americas. In 2025, our sales estimates are similar to the prior estimates and we've added 2026 estimates, what you can see are slightly above the 2025 levels. For 2024, we currently estimate our consolidated unit costs to approximate $1.60 per pound. We've got some details in the reference materials. I believe, on Page 30 that you can look at the composition of those costs but $1.60 very similar to what we had in 2023. On Slide 14, we put together our projected volumes and cost projections, and we model the results for our EBITDA and cash flow at various copper prices ranging from $4 to $5 copper. These models use the average of 2025 and 2026, and our current volume estimates and our cost estimates and holding gold flat at roughly current levels of $2,000 per ounce and molybdenum flat at $19 per pound. And you can see here on the charts that annual EBITDA in these periods would range from $10 billion per annum at $4 copper to over $14 billion per year at $5 copper, and operating cash flows under these price scenarios to range from $7 billion to over $10 billion. And we've got sensitivities to the various commodities on the right-hand side of the chart, really well positioned with a lot of lot reserves, large-scale production. We not only have current exposure to copper, but all of our future projects and growth opportunities are well positioned to benefit from future metals intensive growth, and this will give us the ability to generate returns on projects and enhance cash returns under our performance-based payout framework. Turning to the capital expenditures. On Slide 15, we show our current forecast for '24 and '25. We should also show where we ended up for '23, which totaled $3.1 billion, and that was slightly lower than what we had guided to in October of $3.2 billion and capital for 2024 is currently forecast of approximately $3.6 billion compared with $3.9 billion preciously. The 2025 estimates that are new here are currently estimated to total $3.8 billion. That includes $1.2 billion in discretionary growth projects, which totaled $2.4 billion over the 2024 and 2025 years. This category reflects the capital investments we're making in new projects, to generate returns that under our financial policy are funded with 50% of available cash that's not distributed. They're value-enhancing projects that are detailed in the reference materials on Slide 33. We're going to continue to be very disciplined around capital expenditures, carefully managing those. You saw we adjusted the capital expenditures down for 2024. And as we go forward, we'll continue to look at opportunities to do things to sustain our business and to do things on a low capital intensity basis. And finally, before we take your questions, we — just on Slide 16, we reiterate our financial policies, and those are prioritized centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing growth projects. Balance sheet is solid. We've got strong credit metrics and a lot of flexibility within our debt targets to execute on our projects. You may have seen that Moody's upgraded our credit rating in December, and that just demonstrates our strong financial profile. Indicated on the slide, we've distributed almost $4 billion to shareholders through dividends and share purchases since the payout framework was implemented in the second half of 2021, and we have an attractive future long-term portfolio that will enable us to continue to build value, long-term value for shareholders. The global team as we go forward is really highly focused on our strategy of being foremost in copper, and we're driven to continue pursuing long-term value in the business and executing our plans responsibly, safely, and efficiently. And I want to thank everybody for their attention, and we'll now take your questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Alex Hacking with Citi.

Alexander Nicholas Hacking

I guess my question is around Bagdad and the technical study. Now I was a little surprised by how high the CapEx was $3.5 billion or an incremental 100,000 tons, about $35,000 a ton. I mean, in your view, is that the new normal for a concentrate project? Or are there particular factors the fact that are raising the CapEx above historical levels?

Kathleen Lynne Quirk

Thank you, Alex. I think it is somewhat of a new normal for the cost of a concentrator and related mining infrastructure. When you do — you're dividing on the cost per ton, you're looking at how many pounds of copper are going to come out of that concentrator. And our U.S. mines are characterized by relatively low ore grades. And Bagdad has relatively low copper ore grades but also has molybdenum kicker. So molybdenum would add something like 10 million pounds of molybdenum with an expansion. So that will be another benefit. But really, what we need to do is focus on — it does bring down our overall cost per pound. So that's a big plus for us. When you look at an investment in the U.S., it may be to develop a relatively low grade mine, but something important to point out is that we don't have the tax burden in the U.S. that you have in the international location. So I think our projects in the U.S., while they're low grade, when you cut through all the economics and you look at the ability for us to — to execute the projects and look at the risk associated with them — the different than looking at a project in a different location. So there's some pluses or minuses that go into the bottom line. But we started this work on Bagdad some time ago, and we've updated all of the capital costs in line with where current capital costs are. And so I think a reality of the market is that the incentive price to develop new copper, even if it's brownfield, is much higher than it has been in the past. And that's another reason why we believe that the markets that they need, these copper units are going to have to adjust to the incentive prices required to get these projects going because we don't want to front-run the market. We want to be prepared, we want to be have options to go forward as soon as we can, but we don't want to be in a position where we're investing in making major capital commitments before the market prices are challenge to us already.

Richard C. Adkerson

Yes, Alex. Let me just add very brief very briefly that Kathleen makes a really good point about these relative economics. No royalties in the U.S., U.S. tax rate is much lower — federal tax rates much lower than outside the U.S. We have a net operating loss carryforward. Community support is strong in the U.S. and we have no minority interest there. So looking at global benchmarks needs to be adjusted for the site-specific factors that we have in the U.S., and they're very positive.

Operator

Your next question comes from the line of Carlos De Alba with Morgan Stanley.

Carlos De Alba

Question is on cost. I just want to see if you can provide a little bit more color? The guidance for the first quarter of net unit cash cost of $1.55 per pound looked very, very good relative to consensus stations and our own estimate. However, for the full year, the guidance came at $1.60, and that is a little bit higher than the market — than again, consensus and our model suggests. What are you expecting? What the viability in this were you surprised in — at the beginning of the year then maybe throughout the rest of the quarters is increasing. What is driving that? And to what extent this number for the year is conservative?

Kathleen Lynne Quirk

In terms of the first quarter, we do have some gold that was not shipped in the fourth quarter that will be shipped in the first quarter. And so the relative gold-to-copper ratio impacts the first quarter and makes that less than what we expect the average to be for the full year. I don't know what Carlos, what you had in there for export duties, but we're assuming in Indonesia that those are continuing. We are continuing to discuss with the government of Indonesia, the applicability of those duties. And I think the more that we make progress on the smelter the better our case there is. But that we factored into the estimate, but we are continuing to have that discussion. So if we are successful in reducing those duties, that would be a benefit.

Carlos De Alba

All right. And just to clarify this, Kathleen. The cash cost guidance for the year, of $1.60, includes that the duties in Indonesia concentrate exports remain throughout the entire of the year, right, the full year?

Kathleen Lynne Quirk

Yes. Our export — it only applies to export volumes. And so as we go through the year, the exports will decline because we'll be ramping up the smelter. So our goal for 2024 is to get the full ramp-up completed. And so that's not something that will continue long term, the duties, once we get the smelter up and running. But it will start to decline over the course of the second half as we ramp up and we produce more domestically.

Operator

Your next question comes from the line of Christopher LaFemina with Jefferies.

Christopher LaFemina

Richard and Kathleen, I wanted to ask about the kind of cost trends in North America, in particular, at Morenci. So I know that you're guiding to a slight increase in your site production delivery costs in 2024. And I assume that is a function of volumes being lower. But if we think about kind of where this business could be headed assuming that Morenci can kind of get back to where it was 12 or 18 months ago. And I'm not sure if that's a good assumption, but let's assume that to be the case. With the leaching ramp up with the staffing and productivity improvements within technologies, and potentially even longer term with the Bagdad expansion, where could that kind of site production and delivery cost number trend down to? Could it get back to $2.50 or lower? Or is $3 a pound sort of the new normal for that business?

Kathleen Lynne Quirk

Well, we hope it's not the — Chris. We're working hard. I mean one of the things that you've got to take into account here is we are in a low grade period in the U.S. I think the grades that we had in 2023 were the lowest that they had been in probably 10 years or so or more. So we are in a period, and that's continued to '24 where we do have some low grade that we're going through. But that is why it's so important for us to bring on units with a lower incremental cost and the leach opportunity will help us there. And as we are able to get those pounds put into reserves longer term, not just what you're mining that year or getting that year, but multiyear reserve additions for the leach that spreads the cost — all the costs over more reserves. And so it does help us with driving the economies of scale and why it's so important. We're not in a position now to say where costs could go. There's been a number of other factors that we have, inflation factors and things like the cost of basic parts and materials and supplies, has gone up from where it was just 2 or 3 years ago. But we are very focused on it. And — all of these self-help things for us have very high rates of return. There's not a lot of capital involved. It's focused resources. It's not an easy thing because it would have been done already, but it is an area we think we can make improvements. We can also focus, which we're doing now on the last couple of years, we've had to rely more on contractors because of the staffing issues but as we get staffing set up and get more experience in the workforce, we can reduce our reliance on contractors, as you probably know, have gotten expensive, and in Arizona is a very competitive market. So we're working on all those things within the things that we have within our control and are really going to be focused on trying to drive the cost down. We're also looking at Morenci specifically at different configurations. We're looking at whether it makes sense for us to be operating all of our equipment like we are today and looking at if we cut back some things would that be the cost and benefits to that because that could have volume impacts as well. But is that a better setup, a more efficient setup that will allow us to drive costs lower. So we've got some of those initiatives that are — they are being reviewed right now on what the right setup is given how costs have risen.

Operator

Your next question comes from the line of Orest Wowkodaw with Scotiabank.

Orest Wowkodaw

Given the cost — the capital costs involved and the timing of building new projects, and the strength of your balance sheet, I'm just wondering whether M&A of producing assets is something that's on the radar because it certainly seems like there could be some assets available out there, especially in jurisdictions or not currently in?

Richard C. Adkerson

Well, we're constantly monitoring the market and you can be confident that opportunities are available are presented to us, and we consider them. The facts we haven't found those attractive today. We have such great opportunities to create value totally for our shareholders by focusing on internal growth, through the leach project, through the brownfield developments in the Americas, through the Kucing Liar project in Indonesia, and now with the expectation that we'll go beyond 2041, we're going to do additional exploration there to understand what the opportunities are. Success in any of those opportunities creates value where there's no value in our current share price. So it's all for the best of our shareholders. And that makes it much more difficult for external opportunities to compete with them. And my experience has shown that small mines get smaller and big mines get bigger. So we really are — as I said in my opening comments, pleased about where Freeport is positioned for what we believe is going to be a great future for our company.

Operator

Your next question comes from the line of Edward Goldsmith with Deutsche Bank.

Edward Goldsmith

Two questions from my side. So firstly, can you give an update on the status of the negotiations over a concentrate export extension post May? And secondly, can you outline the reductions to the 2024 CapEx? I think they were the discretionary and the other CapEx bucket level.

Kathleen Lynne Quirk

Yes. On the first part of the question, our current export license in Indonesia goes to May of 2024. And we are continually having discussions with the government of Indonesia about the fact that while we will be substantially complete on construction activities by the end of May, which was really important target for us and for them that just the ordinary course of a smelter start-up, it takes 5 or 6 months to get through. And so we're having those discussions. They understand the situation, and they're encouraging us to continue to meet our targets and that those discussions will continue. (inaudible) that the alignment that we have with the 51% ownership of the state-owned company, MIND ID, in PT-FI's operations is really important here. That, combined with tax revenues, et cetera, that the government gets from having consistent operations at PT-FI is we're both aligned in that to have exports continue. So the conversations have been constructive to date, but we've just got to — we've got to continue to progress it. And have those — continuing to have the discussions with the government, and we're doing that on a regular basis.

Richard C. Adkerson

Well. Kathleen, just let me add. They're not negotiations over this issue. The mine — I mean I've spoken in recent months on at least 3 occasions directly with the President about it. He understands it, the Mines' Minister who has the business background clearly understands it. It's just administrative procedurally, they concluded not to grant that export rights beyond this date to see if we complete the smelter as we've committed to do it. But beyond that, it will be just be an administrative action to get it approved.

Kathleen Lynne Quirk

On the second question with respect to capital expenditures. We always go through a process of looking for opportunities to put out capital if it's not required in the current year, and we went through a process between the last update on this one to really look hard at what we could efficiently spend this year and cut back on some things. Some of that showing up in 2025. We'll do the same thing again because really what we want to do is deploy the capital as efficiently as we can and make sure we're sustaining the reliability of our operations, but also looking at — we don't want to be doing too many things at one time. And so we always take a hard look at it. So we'll continue to do that as we go forward and manage the capital very carefully. But there wasn't really one big thing. There was a number of things that we did and looking at the prior estimate for 2024.

Operator

Your next question comes from the line of Michael Dudas with Vertical Research.

Michael Stephan Dudas

With regard to your proposed investments in the U.S., maybe looking in Latin America, maybe you care to remind us on an internal rate of return, risk-adjusted rate return basis, what Freeport is looking for? Certainly, you mentioned, on the U.S. investments, you get benefits from royalty and tax issues. But just on a general basis, even when you're thinking about your assets in Indonesia. And then the follow-up on that, is the industry relative to a year ago today? Is the industry ahead of the curve or behind the curve on meeting what the expected demand opportunities are in the market?

Kathleen Lynne Quirk

On the first part of the question, with respect to how we evaluate projects and returns, we don't target one number. We look at what the specific project is, what the execution risk is, where it's located. And we run a range of commodity price assumptions around it to look at — what we're really focused on in deploying capital is investing and putting our infrastructure and investments in places where we can execute the plan and in places where we've got long-term reserves because anybody that tells you they can get the copper price right is wrong because it's going to move up and down. And so what we want to have is a situation where we've got a very long life reserve where you can make that capital investment upfront and realize cash flows over a long period of time and not have to get the price forecast for copper perfect in the first year or 2. And so when we look at returns, we're looking at those projects that have leverage to future copper. And we may — we look at something that is outside of the U.S., we may apply higher risk factors and we look to get higher rates of return than what we would want to have in something like the U.S. where for reasons that Richard talked about, have somewhat of a lower risk profile for us. But it is not one scientific number. It's a range of scenarios that we run around a project. And again, looking at the resource and the size of the investment and our ability to generate returns over a long period of time, that would be consistent, not that it would go away — it would fall off something that could be earned over a long period of time, has a long tail, which a lot of our projects do. And Richard might have some perspectives on the second question. I think it's obvious that there haven't been new projects sanctioned in our industry for some time. And what's happened recently in recent years with the copper prices rallying and then falling off has just caused more delays, more cautiousness by developers in developing the project. So I would say, in my opinion, the situation has become more significant because the projects are taking longer, not shorter. And we talked about when we started on Grasberg Underground, we started planning — started investing 20 years ago in it. I mean we really have — these are long lead time projects, and we really need to have started investments. And that's why we're really focused on what can we do to continue to plan for these long-term projects. So what else can we do and what can we do to take advantage of technology that's available to us? And what can we do to get more out of the resources we already have? But not everybody has that ability. And Richard, I don't know if you want to add any comments to that second part.

Richard C. Adkerson

Well, I'll add a brief comment to the first part too, Kathleen. The — my early experience in my career was in the oil and gas industry. And early on, Dan Yergin and I wrote a paper on oil price forecasting which basically evidenced how wrong forecasts can be. And so we approach, as Kathleen described, all of our investment and business planning on a scenario basis, not trying to predict a particular price or range but to look at what impact investment decisions and operating decisions have on our overall portfolio. And we look to protect ourselves on a portfolio basis from downside risk and then structure investments to take advantage of what we have is confidence in the long-term price. So it's not any kind of formal rate of return kind of criteria that you see in a lot of industries, which work elsewhere. Have the saying that figures don't lie but lie is figure. And we just really base these things, as I said, on scenario planning and portfolio impacts. The basic thesis, I believe, for the demand for copper is unchanged and continues to be supported. From the very start, my work with ICMM, its Chairman from 2 occasions, but more recently when all the issues about aspirational goals for carbon reductions were being considered in such promise, I've always said that there are a lot of unanswered questions and the movement towards these aspirational goals will not be consistent, but they'll have issues, complications and so forth, and that's certainly what we're seeing. The future of copper is really influenced significantly by investments in carbon reduction. And I think it's something the world absolutely has to do. There are other factors related to global growth, connectivity, these data centers, some of that's being driven by artificial intelligence. Just everywhere you turn, the world is getting more electrified. And that's why I think the fundamental long-term demand thesis for copper is just getting stronger and stronger.

Operator

Your next question comes from the line of Brian MacArthur with Raymond James.

Brian MacArthur

It goes back to what Alex was asking in Bagdad. So I just want to make sure, as I look at these numbers. So the project capital is $3.5 billion. And I would have to think you get some infrastructure benefit there, so it's not a true greenfield. And then you talk about a $3.50 to $4 incentive copper prices, and I understand the benefits of new royalties and taxes. Does that sort of say that if you didn't have infrastructure, the capital costs would have been higher? And if you didn't have all these tax benefits, the incentive price would be an awful lot higher, i.e., if anybody else had to do a greenfield there, you'd probably need an incentive price well over $4 to make it work, i.e., those numbers include all the tax benefits and everything that you were talking about before, if I can ask the question that way.

Kathleen Lynne Quirk

Brian, the — if somebody else has the same situation, greenfield and the grades we have, it would be a lot more expensive.

Richard C. Adkerson

A lot more. Your $4 is absolutely right. I mean you just look at recent projects and look at how costs escalate and then what would have taken from an incentive price to justify that project from the outset if the cost numbers have been known. So this is not that complicated. It's not a greenfield project. We've operated there for 80 years or so. And it's about a straightforward project as you could have, but it's telling for the industry even with this kind of straightforward project, the challenge you face. It's cost, it's tailings, and we do benefit from infrastructure. This is just a mill expansion. It's not a building a new mine, but then there's a challenge of getting workers and housing for workers. So all of this is real telling on the supply side. I just talked about the demand side support for copper. This is a great example of a simple project in terms of the relative complexities of projects in our industry, this is relatively simple. And yet, it faces these challenges of being an economically justified in today's price. At the outset, I said today's copper price is not — the price is adequate to stimulate the kind of investments that are going to be needed for this industry. And that's why we're optimistic about future prices.

Brian MacArthur

Right. And maybe if I could just ask just on the capital allocation. I mean, you've got lots of options, as you said. But if you're successful for Phase 3, I mean you get as much production there as you would hear, I assume a fraction of the capital cost. Does Bagdad get pushed in that situation? I mean, I get that the world needs probably all of it. But would they get sequenced or are they complementary? I mean, I know they don't depend on each other, but are they complementary? And you would do both at once if both work?

Kathleen Lynne Quirk

We're prioritizing the leach initiative. I mean that is one that's a no-brainer for us. It's very, very little capital that we're investing in it and very low increment — it's our lowest incremental operating cost of anything in the U.S. And so that's a no-brainer. We're pursuing that regardless. That makes a ton of sense, and we're pursuing that regardless. We think the world is going to need something beyond that, obviously. And so on the Bagdad thing, we just want to get it to where — continue to enhance the optionality in it, and we need to do some things anyway. We're doing some infrastructure on tailings that we would need to do anyway in the future, maybe not as quickly as what it would need with the new project, but we need to do those anyway. So we're going to do those to the extent we can do that efficiently. We want this autonomous thing that we're pursuing. Years ago, people thought you didn't really need autonomous in the U.S. But now we — particularly in these remote locations, you really, really do when you consider the cost of the workforce and the housing limitations and that sort of thing and the opportunities to upscale our employees, we think it checks all of those boxes. So autonomous, we want that to see how that unfolds. So we don't have to pull the trigger on Bagdad now but we want to put it in a position where it can go forward. It makes sense if the world needs more copper to get copper from where we already have it. And so it does — it's a good project. It's not a barn burner from an economic standpoint, right now, but will have it today. And I think it will get time at some point. It's just we aren't predicting exactly when.

Richard C. Adkerson

And Brian, we got a strong enough financial position that we can — capital is not a barrier for us to do in projects that make sense.

Operator

Your next question comes from the line of Alan Spence with BNP Paribas.

Alan Henri Spence

(inaudible)

Richard C. Adkerson

Alan, you're breaking up on us.

Alan Henri Spence

Sorry, I'll try again. Hopefully, you can hear me.

Kathleen Lynne Quirk

Yes, that's better.

Alan Henri Spence

The strong performance for Grasberg in December, is that a level you think could potentially be through '24? Or was there something you need about what happened last month? And also, if you could remind time line to get to 240,000 tonnes per day run rate?

Kathleen Lynne Quirk

With respect to…

Richard C. Adkerson

We've got a great — Go ahead, Kathleen.

Kathleen Lynne Quirk

Okay. I was going to say Mark Johnson is on the line, he can add to it. If you want with respect to December, what highlights, we got that SAG mill completed in December. So really, that gave us the ability to put more or throughput through the concentrators. And with the combination of higher grades and strong recoveries, we had a great month. Now we have the ability to continue to have strong performance. We achieved a lot of records in December but we do have the ability and some upside to continue that. That SAG mill was originally put in the plan because over time, we'll need the additional grinding capacity, et cetera, to take the ore that will be coming but right now, while we're in these higher-grade sections, the more we can put through the mills, the better the copper production will be. In terms of the $240 million, right now, we don't have $240 million in our plans. But over time, with the addition of Kucing Liar, we'll have that capacity to do it. But having SAG3 does give us some more opportunities in the near term to — if we continue to have high rates of ore produced from the underground will give us some upside. A mine, we don't talk a lot about but one that we're going to try to keep improving on is the Big Gossan mine. It's a relatively small mine, but very, very high grade. And we've got some plans to bring in some additional and that's reflected in the 5-year guidance, but some additional throughput from Big Gossan that will add copper production and gold production. And Mark, I don't know if you want to add to any of those comments.

Mark J. Johnson

Yes. Kathleen, the only thing I would add is as part of the KL project, we also add some — over the shorter term, we had some ore flow capacity and optionality at GBC. We — that allows us to get GBC up from like 120,000 up to 140,000 tonnes a day in 2026. And at that point, we'll be able to run close to 240,000 tonnes through the mill. The mine and mill will be matched. And then as you said, the KL come up and then GBC and KL share portions of the ore flow system, but over the short term, we sequenced that part of the KL ore flow that gives us the opportunity at GBC in the much shorter term.

Operator

Your next question comes from the line of Bill Peterson with JPMorgan.

William Chapman Peterson

Nice job on the quarterly execution. Thanks for sneaking in my question here. So I wanted to come back to the leaching efforts, the incremental 200 million pounds. I think you mentioned 2- to 3-year period. Is that a 30 (inaudible) ramp? Or is that more back-end weighted? And you've consistently talked about low capital intensity. Can you remind us what the capital associated with this is, I guess, quantified? And has there been any CapEx creep in interim similar to just other broader projects?

Kathleen Lynne Quirk

On the time frame for the incremental 200, we have not given a specific time frame. We do feel we can get it done within a couple of years, and we'll add whatever we can in the interim. This Leach Everywhere initiative that we have, where we are accessing parts of stockpiles that hadn't been accessed before getting access to some of the side slopes and some of the areas around the stockpile that we just didn't leach before. We're — that's been a big driver of success and will continue to be. The other one that we're excited about is the targeted drilling. And through our data, we can see where you have situations where the solution that needs to get to the ore has been blocked for some reason over history. And this targeted drilling allows us to get access to it. We are testing this year, some abilities to do that more at scale. And that is something that we're really interested to see how that develops and whether that will give us some additional incremental production. We haven't factored that into our plans at this point. But we're going to continue to use these covers. We still don't have everything on the — stockpiles are so massive, covering — spanning particularly Morenci, just miles of area. And so we're still doing the covers. We're still looking for other opportunities to get heat into the stockpiles. We're targeting some pyrite ores in some of our operations that have pyrite in the ores, that is a source of heat as well. But there are a number of things that we're working on that are not the big R&D effort, but things that we can do from an operational standpoint. But we'll stay tuned. We will — this is a big initiative and stay tuned as we go forward, love to give you a little bit more as we go through 2024 in terms of the time frame. We haven't spent much capital on this initiative. We've already got the infrastructure — basic infrastructure, the tank house capacity, this is copper that goes to tank house, not a smelter. And we have already excess latent tank house capacity. We've spent some money but it doesn't round to anything really big. The operating cost — the incremental operating costs of this have been very low on the order of $1 per pound and so it's just a really, really exciting opportunity for us to generate value. And so as we go forward, we don't see huge amounts of capital either that will come into play. When you get to this piece that's R&D, that's where we need to make sure that all these things can be applied and deployed at scale and can be economic. But that is just ongoing. But the first 400 million pounds, we think that we can do that without spending a lot of capital.

Richard C. Adkerson

Thanks, Kathleen. And you may have noted this, Kathleen, but importantly, there's no permitting issues. And that is a real challenge for any kind of project you do in terms of brownfield expansions and really tougher greenfield expansion. So here, no capital, low operating costs, no permitting delays.

Operator

Our final question will come from the line of Lawson Winder with Bank of America Securities.

Lawson Winder

I just — if I could just sneak in 1.5 questions. One would just be on the current level of the dividend. I mean, is your view that given the cash flow outlook, your view of the copper price, I mean, is this a comfortable level for the dividend for 2024? And then just my half question would be, is there any movement within your existing TCRC contracts to potentially renegotiate those or get the benefit of some of the really, really low spot pricing we're seeing today?

Kathleen Lynne Quirk

On the dividend question, our Board reviews the financial policy on a regular basis, and we put in place the base dividend, the variable dividend, and we've been paying at that level for some time now. We'll continue to review that with the Board. You can see from our results — the financial results that we're projecting for 2024 and it look very good but we always going to look at what's going on in the market and don't want to put ourselves in a position of running up debt, but — and — but we have a good balance sheet. So I don't want to front-run anything. The Board will look at this on a regular basis, but our financial position is in really, really excellent shape. The second question on TCRCs, we reach agreement, as you know, with — on long-term TCRCs that are done on fixed contracts once a year. And since then, spot rates have come a lot, lot lower given the tightness in supply. We do sell some things on a spot basis, but most of it is sold under these fixed contracts where we have the TCRCs fixed. The other thing is once we get the smelter in Indonesia up and running, we don't have — we still do what Cerro — still have with Cerro Verde concentrate that we sell. But everything from Indonesia will be really just processed through our own smelters.

Richard C. Adkerson

And our contracts are long term in terms of volumes, but the TCRCs are renegotiated each year. And you raised a great point for those of you who haven't followed it, but the situation right now with smelters where they can't get concentrate to process is a real strong indicator of where this market is and where it's going.

Operator

I'll turn the call back to management for any closing remarks.

Kathleen Lynne Quirk

We appreciate it, everyone. If there are any follow-ups, feel free to call David and we're available to continue to discuss and we'll report to you our progress throughout the year.

Richard C. Adkerson

Yes. Thank you for joining us today, and everyone, have a great day.

Operator

Ladies and gentlemen, that concludes our call for today. Thank you for your participation, and you may now disconnect.

FCX stock and rival Southern Copper toyed with rebounds as sudden signs of life from China’s stock market helped boost the copper price.

PHOENIX, January 24, 2024–(BUSINESS WIRE)–Freeport-McMoRan Inc. (NYSE: FCX) today announced that it has posted its fourth-quarter and year ended 2023 financial and operating results press release on the Investor Relations page of its website at https://investors.fcx.com/investors/news-releases.

As previously indicated on its website, FCX will host a conference call today with securities analysts at 10:00 a.m. Eastern Time to discuss quarterly and year end results. The conference call will be webcast on the Internet along with slides. Interested parties may listen to the conference call live and view the slides on the Investor Relations page of FCX’s website at https://investors.fcx.com/investors/presentations. A replay of the webcast will be available through Friday, February 16, 2024.

FREEPORT: Foremost in Copper

FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is one of the world’s largest publicly traded copper producers.

FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru.

By supplying responsibly produced copper, FCX is proud to be a positive contributor to the world well beyond its operational boundaries. Additional information about FCX is available on FCX's website at fcx.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240123350644/en/

Contacts

Financial Contact:David P. Joint(504) 582-4203

Media Contact:Linda S. Hayes(602) 366-7824

(Adds details from conference call in paragraphs 2-4 and 10-11; updates stock in first paragraph)

Jan 24 (Reuters) – Copper miner Freeport-McMoRan beat Wall Street estimates for fourth-quarter profit on Wednesday, helped by strong production and higher prices for the red metal, sending its shares up about 6% in morning trading.

Demand for copper, which is used in nearly every electronic device as well as in construction and many other industries, remains tight due in part to strong demand in the United States and Canada, executives said.

Prices of copper rose in the quarter despite macroeconomic concerns, including regional conflicts, thanks in part to a weaker dollar, lower inventories and China's moves to boost its struggling housing and stock markets. Executives said they expect prices to rise further still in order to incentivize further production.

"We're optimistic about future prices," Freeport CEO Richard Adkerson told investors on a conference call to discuss the results.

Freeport's quarterly copper sales gained 7.1% year-over-year to 1.1 billion recoverable pounds, while average realized price per pound rose 1.1% to $3.81.

Its quarterly gold sales also rose, gaining 19.9% to 549,000 recoverable ounces with the average realized price per ounce up 13.7% at $2,034.

Average spot gold prices rose more than 13% in the quarter on a softer dollar and hopes that the U.S. Federal Reserve would cut interest rates, helping gold miners such as Freeport.

On an adjusted basis, the company earned 27 cents per share for the three months ended on Dec. 31, compared with analysts' average estimate of 22 cents, according to LSEG data.

The company reported revenue of $5.91 billion in the quarter, beating estimates of $5.86 billion.

Adkerson reiterated that the company would focus more on internal growth, saying that Freeport has not found an attractive buyout possibility. The company has been investing heavily in copper leaching operations.

In Indonesia, Freeport expects to open a new copper smelter later this year that was required as part of a deal with government officials. (Reporting by Tanay Dhumal in Bengaluru and Ernest Scheyder in Houston; Editing by Devika Syamnath)

Freeport-McMoRan (FCX) came out with quarterly earnings of $0.27 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to earnings of $0.52 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 28.57%. A quarter ago, it was expected that this mining company would post earnings of $0.32 per share when it actually produced earnings of $0.39, delivering a surprise of 21.88%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Freeport-McMoRan , which belongs to the Zacks Mining – Non Ferrous industry, posted revenues of $5.91 billion for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 1.45%. This compares to year-ago revenues of $5.76 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Freeport-McMoRan shares have lost about 10.3% since the beginning of the year versus the S&P 500's gain of 2%.

What's Next for Freeport-McMoRan?

While Freeport-McMoRan has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Freeport-McMoRan: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.40 on $5.57 billion in revenues for the coming quarter and $1.71 on $23.74 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Mining – Non Ferrous is currently in the bottom 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Southern Copper (SCCO), is yet to report results for the quarter ended December 2023.

This miner is expected to post quarterly earnings of $0.75 per share in its upcoming report, which represents a year-over-year change of -35.9%. The consensus EPS estimate for the quarter has been revised 1.3% lower over the last 30 days to the current level.

Southern Copper's revenues are expected to be $2.42 billion, down 14.3% from the year-ago quarter.

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Zacks Investment Research

Freeport-McMoRan (FCX) reported $5.91 billion in revenue for the quarter ended December 2023, representing a year-over-year increase of 2.6%. EPS of $0.27 for the same period compares to $0.52 a year ago.

The reported revenue represents a surprise of +1.45% over the Zacks Consensus Estimate of $5.82 billion. With the consensus EPS estimate being $0.21, the EPS surprise was +28.57%.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Freeport-McMoRan performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Sales in thousands of ounces – Gold – Consolidated basis: 549 Koz versus the three-analyst average estimate of 584.29 Koz.

• Production in millions of pounds – Molybdenum – South America: 5 Mlbs compared to the 5.54 Mlbs average estimate based on three analysts.

• Production in millions of pounds – Molybdenum – By-product – North America: 7 Mlbs compared to the 6.93 Mlbs average estimate based on three analysts.

• Total Net Cash Cost Per Pound of Copper: $1.52 compared to the $1.51 average estimate based on three analysts.

• Sales in thousands of Ounces – Gold – Indonesia: 544 Koz compared to the 580.34 Koz average estimate based on three analysts.

• Revenues- Indonesia: $2.74 billion versus the three-analyst average estimate of $2.63 billion. The reported number represents a year-over-year change of +21.9%.

• Revenues- Molybdenum: $157 million versus $220.24 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -5.4% change.

• Revenues- South America copper mines: $1.11 billion versus $1.10 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -18.4% change.

• Revenues- North America copper mines: $1.40 billion versus $1.32 billion estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -3.9% change.

• Revenues- Rod & Refining: $1.35 billion versus the two-analyst average estimate of $1.47 billion. The reported number represents a year-over-year change of -0.7%.

• Revenues- Atlantic Copper Smelting & Refining: $606 million versus $659.67 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a -11.3% change.

• Revenues- Corporate, other & eliminations: -$1.45 billion versus the two-analyst average estimate of -$1.68 billion. The reported number represents a year-over-year change of -4%.

View all Key Company Metrics for Freeport-McMoRan here>>>Shares of Freeport-McMoRan have returned -10.9% over the past month versus the Zacks S&P 500 composite's +2.4% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

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Freeport-McMoRan Inc. FCX recorded net income (attributable to common stock) of $388 million or 27 cents per share in fourth-quarter 2023, down around 44.3% from $697 million or 48 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at 27 cents, topping the Zacks Consensus Estimate of 21 cents.

Revenues rose nearly 2.6% year over year to $5,905 million. The figure also surpassed the Zacks Consensus Estimate of $5,820.7 million. The company witnessed higher copper sales in the reported quarter.

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

 

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

Freeport-McMoRan Inc. price-consensus-eps-surprise-chart | Freeport-McMoRan Inc. Quote

 Operational Highlights

Copper production rose nearly 2.3% year over year to 1,095 million pounds in the reported quarter. The figure fell short of our estimate of 1,108 million pounds.

Consolidated sales increased around 7.1% year over year to 1,116 million pounds of copper. The figure was higher than our estimate of 1,085 million pounds. The upside can be attributed to higher mining rates.

The company sold 549,000 ounces of gold, up around 16.3% year over year. The figure was lower than our estimate of 580,000 ounces. FCX also sold 22 million pounds of molybdenum, up around 15.8% year over year during the quarter. The figure was higher than our estimate of 20 million pounds.

Consolidated average unit net cash costs per pound of copper were $1.52, flat year over year. The figure was lower than our estimate of $1.58.

The average realized price for copper was $3.81 per pound, up around 1% year over year. The figure was higher than our estimate of $3.6 per pound. The average realized price per ounce for gold rose around 13.7% year over year to $2,034. The figure was above our estimate of $1,900.

Financial Position

Cash and cash equivalents (including restricted) at the end of the quarter were $5,966 million, down around 27.8% year over year. The company’s long-term debt was $8,656 million, down around 9.7% year over year.

Cash flows provided by operations were $5,279 million for the year ended Dec 31, 2023.

Guidance

Freeport expects consolidated sales for the year 2024 to be approximately 4.1 billion pounds of copper, 2 million ounces of gold and 85 million pounds of molybdenum. This includes an estimated 1 billion pounds of copper, 575,000 ounces of gold, and 20 million pounds of molybdenum in the first quarter of 2024.

The unit net cash costs for copper are expected to average $1.60 per pound for 2024, encompassing $1.55 per pound in the first quarter of the same year. These predictions are based on the achievement of current sales volume and cost estimates, assuming average prices of $2,000 per ounce of gold and $19.00 per pound of molybdenum for the entire year.

The company is also forecasting operating cash flows of approximately $5.8 billion for 2024. Meanwhile, capital expenditures for the full year are projected to be around $4.6 billion.

Price Performance

Freeport’s shares are down 14.4% in the past year compared with a 9.8% fall of the industry.

Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

Freeport currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Cameco Corporation CCJ, Carpenter Technology Corporation CRS and The Andersons ANDE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cameco has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 12.5% in the past 60 days. The stock is up around 75.5% in a year.

The consensus estimate for CRS’s current fiscal year earnings is pegged at $3.97, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 57% in the past year.

ANDE beat the Zacks Consensus Estimate in three of the last four quarters and missed one, with the average earnings surprise being 32.8%. The company’s shares have increased 45.4% in the past year.

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• Net Income: Q4 net income of $388 million, $0.27 per share; adjusted net income of $393 million.

• Revenue: Q4 revenue increased to $5.9 billion, with full-year revenue at $22.9 billion.

• Copper Sales: Exceeded estimates with 1.1 billion pounds sold in Q4; 4.1 billion pounds expected in 2024.

• Gold and Molybdenum Sales: Q4 gold sales of 549 thousand ounces; molybdenum sales of 22 million pounds.

• Operating Cash Flows: Generated $1.3 billion in Q4, totaling $5.3 billion for the year.

• Capital Expenditures: $1.4 billion in Q4, with a total of $4.8 billion for the year.

• Debt and Cash Position: Consolidated debt at $9.4 billion; cash and cash equivalents at $4.8 billion.

• Warning! GuruFocus has detected 6 Warning Signs with KMB.

On January 24, 2024, Freeport-McMoRan Inc (NYSE:FCX), a leading international mining company, released its 8-K filing, detailing its financial performance for the fourth quarter and full year ended December 31, 2023. The company, known for its significant copper, gold, and molybdenum mining operations, including the Grasberg minerals district in Indonesia and the Morenci minerals district in Arizona, reported a net income of $388 million, or $0.27 per share, for the fourth quarter. Adjusted net income, which excludes certain charges, stood at $393 million, or $0.27 per share.

Freeport-McMoRan’s revenue for the fourth quarter reached $5.9 billion, a slight increase from the $5.8 billion reported in the same period of the previous year. For the full year, the company’s revenue was stable at $22.9 billion. Copper sales volumes for the quarter exceeded the company’s October 2023 estimate and the fourth-quarter sales of the previous year, with 1.1 billion pounds sold. Gold sales for the quarter were 549 thousand ounces, while molybdenum sales reached 22 million pounds.

The company’s operating cash flows for the fourth quarter were robust at $1.3 billion, contributing to the $5.3 billion generated throughout the year. Capital expenditures for the fourth quarter amounted to $1.4 billion, with a significant portion allocated to major mining projects and the Indonesia smelter projects, bringing the total for the year to $4.8 billion.

Freeport-McMoRan’s financial position remains solid, with consolidated debt totaling $9.4 billion and cash and cash equivalents at $4.8 billion as of December 31, 2023. The company’s net debt, excluding the Indonesia smelter projects, was $3.6 billion, demonstrating its strong balance sheet and liquidity.

Richard C. Adkerson, Chairman and Chief Executive Officer, commented on the company’s performance, stating, “We enter 2024 with a focus on strong execution of our operating and investment plans, optimism on market fundamentals and a relentless drive to enhance the value of our strong portfolio of assets.” He highlighted the company’s success in advancing growth options and positioning for the future.

Freeport-McMoRan Inc (FCX) Reports Solid Q4 and Full-Year 2023 Results Amidst Global Challenges

Looking ahead, Freeport-McMoRan expects to sell approximately 4.1 billion pounds of copper, 2.0 million ounces of gold, and 85 million pounds of molybdenum in 2024. The company’s focus on productivity gains, cost discipline, and the advancement of organic growth opportunities positions it well to navigate the dynamic global market and continue delivering value to its shareholders.

For detailed financial tables and further information on Freeport-McMoRan’s performance, please refer to the full 8-K filing.

Explore the complete 8-K earnings release (here) from Freeport-McMoRan Inc for further details.

This article first appeared on GuruFocus.

BlackBerry (BB) announced a proposal for $160 million worth of convertible notes to help alleviate near-term financing concerns for the company.

Shares of Freeport-McMoRan (FCX) close 4% on Wednesday as the company released better-than-expected fourth-quarter earnings, with an adjusted EPS of $0.27.

Kimberly-Clark (KMB) reported fourth-quarter earnings, missing out on Wall Street expectations, causing shares of the stock to drop over 5% on Wednesday. For the 2024 fiscal year, the company only expects organic sales to grow in the low to mid-single digits year-over-year.

Yahoo Finance Anchors Josh Lipton and Julie Hyman break down the latest developments for these companies and what it means for them moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: Trending names here, BlackBerry shares in the red as the company proposes private offering $160 million of convertible notes. So of course, BlackBerry, Julie, now company focused on security software. And the news is just that. They’re offering $160 million in convertible senior notes due 2029, private offering. I do see one analyst here from RBC telling their clients the offering will alleviate, in their opinion, near-term financing concerns for the company.

JULIE HYMAN: Right, and BlackBerry– well, people have been whipsawed by BlackBerry in recent months, right? Because the company was going to be IPO’ing its internet of things business, and then in December, said, no, we’re not doing that. In fact, we’re appointing a new CEO here. So the company has tried to embark on this sort of new strategy.

Part of that is trying to raise money here, which is what this convertible note offering has to do. The problem with the convertible note offering is, it’s convertible into shares at some point. And that, then, dilutes the value for existing shareholders. So even though it might mean that the company is raising cash, because of that eventual effect, the share’s under pressure.

JOSH LIPTON: Stocks now down nearly 20% this year, down more than 30% over the past 12 months. Is all the bad news priced in? Time to step in, Julie, and buy it? Not, according to the analysts paid to cover it. Exactly one buy–

JULIE HYMAN: Wow.

JOSH LIPTON: –is left on the street.

JULIE HYMAN: All right. Let’s take a look at another story here. Freeport-McMoRan shares climbing after it reported an earnings beat and provide investors a better than expected forecast for 2024, up 4% on the day. This has to do with metal prices, and in particular, copper prices–

JOSH LIPTON: [INAUDIBLE]

JULIE HYMAN: –which we saw– yeah. Is it red? I guess it is red, or copper-colored, orangish– I don’t know. In any case, it’s up. And so Freeport doing well because of that. Its unit net cash costs per pound for 2024, that forecast is above what analysts had been predicting.

JOSH LIPTON: Yeah, the CEO is kind of sounding an optimistic tone here, just talking about how they’re entering the year here. Talks about execution, talks about optimism, he says, on market fundamentals. Stock is popping today, though, still here, it looks like we’re down year to date and down over the past year.

JULIE HYMAN: You know, I mentioned copper. It occurs to me we call gold the yellow metal. It’s not really yellow either, but in any case, it was also up, and Freeport also mines gold, so that was helpful.

JOSH LIPTON: Red and yellow, it just makes it easy.

JULIE HYMAN: Sure.

JOSH LIPTON: Sure. All right, finally, Kimberly-Clark under pressure. It’s after reporting underwhelming fourth quarter results. Company slightly missing estimates on the top and bottom line. So Kimberly-Clark, of course, you think of brands like Huggies, Julie Hyman. You think of Kleenex, well-known brands. They report they drop. It looks like Q4 organic sales growth, that came in a touch below consensus, volume unchanged. The outlook, I think, disappointed some, specifically 2024 earnings in the organic sales outlook.

Interesting commentary, I thought, from the execs, though, on the American consumer. That kind of struck me, how they talked about the consumer remains pretty healthy, in their words, and kind of echoing, actually, what we heard from Procter & Gamble, by the way, too, this week.

JULIE HYMAN: Yeah, there’s a lot of talk about effects headwinds at this company. I think I see a lot of emphasis on that, which you mentioned here. So that’s part of the issue. There was also some talk ahead of the report about a declining birth rate, and that that for a company that makes diapers is not fantastic news.

When you look at what’s happening in China, maybe there’s a little bit of a pickup there. But that has been something that has perhaps weighed on the company. And if you look at their various sectors, their various units here, personal care was up, but consumer tissue sales were down, and professional sales were down for the company.

JOSH LIPTON: All right, one to watch.

Kinshasa, Democratic Republic of Congo–(Newsfile Corp. – January 22, 2024) – Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) Founder and Executive Co-Chairman Robert Friedland and President Marna Cloete, today extended their congratulations to His Excellency Félix Tshisekedi on his re-election and inauguration as the President of the Democratic Republic of the Congo.

Ivanhoe Founder and Executive Co-Chairman Robert Friedland commented:

"On behalf of Ivanhoe Mines, we extend our congratulations to His Excellency Mr. Tshisekedi on winning a second term. This is the nation's fourth successful election since the turn of the century, which is a positive sign of the ongoing development of the Democratic Republic of the Congo's democratic process. The election reinforces our belief that the country is on the cusp of emerging as a major economic power in Africa, with its bountiful endowment of strategic minerals, youthful workforce and exceptional clean, green hydropower potential.

"Ivanhoe Mines continues its commitment to work in partnership with the people of the Democratic Republic of the Congo, developing its mining industry to unlock the rich economic and social potential of this incredible country. This year we will complete the expansion of the Kamoa-Kakula Copper Complex, making it one of the world's top-three copper complexes, as well as return the historic, ultra-high-grade Kipushi zinc-silver-copper-germanium mine to production. In addition, we are incredibly excited about the geological potential across the Western Forelands, as we increase our exploration efforts this year to find new tier-one copper discoveries. We look forward to continuing to develop our warm and long-standing relationship with the DRC government and its people under President Tshisekedi's second term."

DRC President, His Excellency Félix Tshisekedi, alongside Ivanhoe Mines' President Marna Cloete, cuts the ribbon to mark the formal opening of the Kamoa Centre of Excellence, during his visit to Kamoa-Kakula in October 2023.

To view an enhanced version of this graphic, please visit:https://images.newsfilecorp.com/files/3396/195121_60a6ee72e47e0974_002full.jpg

During his visit to Kamoa-Kakula, His Excellency Félix Tshisekedi, is shown the direct-to-blister smelter construction site by (R-L) Kamoa Copper's Dodo Mbay, Executive, Concentrators; Pontien Kalala, Kakula Mine Manager; and, Magloire Kashiba, Kakula Senior Mine Manager.

To view an enhanced version of this graphic, please visit:https://images.newsfilecorp.com/files/3396/195121_60a6ee72e47e0974_003full.jpg

Ivanhoe Mines is scheduled to attend the Mining Indaba in Cape Town, South Africa in February 2024. The annual conference, Africa's largest mining event, is attended by political leaders, government ministers and representatives of most African nations, international investors, financial institutions, mining industry executives and major news media.

About Ivanhoe Mines

Ivanhoe Mines is a Canadian mining company focused on advancing its three principal projects in Southern Africa; the expansion of the Kamoa-Kakula Copper Complex in the DRC, the construction of the tier-one Platreef palladium-nickel-platinum-rhodium-copper-gold project in South Africa; and the restart of the historic ultra-high-grade Kipushi zinc-copper-germanium-silver mine, also in the DRC.

Ivanhoe Mines also is exploring for new copper discoveries across its circa 2,400km2 of 80-100% owned exploration licences, as well as on the 247km2 of newly acquired joint venture licences, in the Western Forelands located adjacent to the Kamoa-Kakula Copper Complex in the DRC.

Information contact

Follow Robert Friedland (@robert_ivanhoe) and Ivanhoe Mines (@IvanhoeMines_) on X.

Investors

Vancouver: Matthew Keevil +1.604.558.1034

London: Tommy Horton +44 7866 913 207

Media

Tanya Todd +1.604.331.9834

Website www.ivanhoemines.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/195121

In this article, we will take a detailed look at the 11 Stocks That Will Make You Rich in 5-10 Years. For a quick overview of such stocks, read our article 5 Stocks That Will Make You Rich in 5-10 Years.

Can investing in stocks make you rich? This question is rarely posed anymore since data has overwhelmingly proved that investing in the stock markets is one of the best ways to increase your wealth over time. A report in October 2023 by the Wall Street Journal talked about the rise of "mini-millionaires" and how the average wealth of American families was increasing, citing data from the Federal Reserve. Mini-millionaires usually make about $150,000 and $250,000 a year. The report said between 2019 and 2022 families in the 80th to 90th percentile of the income distribution saw the biggest rise in their incomes as their median wealth increased by about 69% from 2019 through 2022, adjusted for inflation.

The report said that over 90% of these families reported owning stocks, either directly or indirectly.

Needless to say, investing in the stock market is full of crevices. You can't expect to get rich investing in low-quality stocks and random companies with no value. Investing in stocks to become rich involves patience, wise choices and sticking to traditional investing principles. Legendary value investor Seth Klarman had in 2000 foreseen the changing trends in the stock market where investors were becoming impatient, expecting to make money without paying attention to the actual fundamentals of companies. But Klarman at the time had also predicted the return of traditional methods of evaluating companies before investing. In his letter to investors Klarman had said:

"If Paul Harvey's serialized radio program "The Rest of the Story" were applied to Wall Street, it would describe the sad denouement of many such "story" stocks. The unraveling of the virtuous circle of growth is not pretty, with earnings shortfalls, plunging share prices, employees with under-water options jumping ship, overzealous shareholders receiving margin calls, accounting chicanery exposed, lawsuits filed, and, to come full circle, the final insult of deletion from the relevant major market index. At this time, attractive valuation is not considered a good story. A slow growth or no growth company trading at one half or one third of its underlying value attracts no important constituency of investors. I sometimes joke about the new market valuation rules of thumb: stocks that fail to meet earnings expectations all seem to trade at 10 times reduced earnings, while formerly profitable companies that report losses all seem to trade at five dollars per share. Many investors avoid these stocks precisely because others are staying away. Why would those kind of stocks ever go up, they wonder. Even those of us with value investing in our DNA generally prefer situations with catalysts for the realization of underlying value.

Over time, this will change. At some unknowable future point, the undervaluation of small capitalization stocks lacking exciting growth characteristics will become so gaping that investors will once again be attracted. The point of investing, after all, is not to have a great story to tell; the point of investing is to make money with limited risk. At some point, investors will drop their Pulitzer prize winning story stocks and revisit their attention on the old classics, stocks that make you money because their undervaluation creates a compelling imbalance between risk and return."

Stocks That Will Make You Rich in 5-10 Years

Seth Klarman of Baupost Group

Methodology

For this article we scoured various analyst reports and interviews to pick 11 stocks that experts believe can make one rich in the next 5-10 years.

11. ChargePoint Holdings Inc (NYSE:CHPT)

Number of Hedge Fund Investors: 16

ChargePoint Holdings Inc (NYSE:CHPT) is one of the stocks that can make one rich in the next few years according to Wall Street analysts. Oppenheimer analyst Colin Rusch last year set a $27 price target on the stock. ChargePoint Holdings Inc (NYSE:CHPT) was trading at $2.11 as of January 4. Here is why the analyst likes the stock:

“Of note, in our view, is that the company’s substantial product development cycle is slowing and management continues to expect material operating leverage as R&D spend moderates. Second, demand continues to be robust as EV sales grow in multiple geographies driving charging infrastructure buildout. Third, the company is well capitalized as it drives toward positive adjusted EBITDA in F2Y4 and manages working capital needs for growth. We remain constructive on shares as we anticipate the company will enjoy both top-line growth and margin expansion in coming quarters.”

In addition to CHPT, investors are also piling into high quality names like Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and NVIDIA Corp (NASDAQ:NVDA).

10. Tarsus Pharmaceuticals Inc (NASDAQ:TARS)

Number of Hedge Fund Investors: 20

Biopharma company Tarsus Pharmaceuticals Inc (NASDAQ:TARS) ranks 10th in our list of the stocks that will make you rich in the next five to ten years. The average price target for the stock over the next one year is $43.25.

Oppenheimer analyst Francois Brisebois, who also has a $43 price target on the stock, explained his bullish thesis on Tarsus Pharmaceuticals Inc (NASDAQ:TARS) in the following words, according to TipRanks:

“Commercially led by eye care veteran CCO Mottiwala (ex-VP Marketing Allergan Eye Care), TARS is well-positioned to develop a new category, eyelid health. We are particularly encouraged by market research revealing an intent to prescribe for demodex blepharitis (DB) of 93%. As awareness grows, our conviction in TP-03’s market potential is reinforced. Additionally, we believe TP-03 could benefit from key differences between DB and dry eye disease (DED) markets. Finally, although we currently don’t value TARS’ pipeline, we believe it should not be dismissed and see multiple opportunities for growth and monetization.”

9. AES Corp (NYSE:AES)

Number of Hedge Fund Investors: 37

Utility company AES Corp (NYSE:AES) ranks 9th in our list of the best stocks that will make you rich in the next 5 to 10 years according to Wall Street analysts.

Sarat Sethi, DCLA managing partner, believes the stock AES Corp (NYSE:AES) has strong earnings growth potential for the next three to five years. The analyst also praised the stock’s dividend yield.

Massif Capital made the following comment about The AES Corporation (NYSE:AES) in its Q3 2023 investor letter:

“Given interest rates’ elevated state, it is perhaps unsurprising that our utility exposure has fared poorly for us this year. We should have hedged the exposure sooner with a Utility ETF short, but we did not do that until the third quarter, after much of the damage was already done. As noted above, our Utility exposure is second only to our materials exposure in terms of negative impact on the portfolio across both the third quarter and the YTD periods. This is primarily driven by our investment in The AES Corporation (NYSE:AES), which was down roughly 26% in the third quarter and 47% YTD. Our other utility exposure is up for the year, including our short position, which, as noted, was put on in the third quarter, and it is probably something we should have had on the books for the entire year.

We attribute, for right or wrong, the entirety of the sell-off in AES to the interest rate environment. Chart overlays are always tricky, so one should not read too much into them, but as a quick sense check of the claim, if one inverts the move-in rates for a generic 10-year US government bond and overlay it with AES stock price YTD, you get the following:..” (Click here to read the full text)

8. Comcast Corporation (NASDAQ:CMCSA)

Number of Hedge Fund Investors: 68

Sarat Sethi of DCLA managing partner likes Comcast Corporation (NASDAQ:CMCSA) as a stock to buy and hold for the next few years because of its strong cash flow, growing dividend and a “very strong management team.”

As of the end of the third quarter of 2023, 68 hedge funds tracked by Insider Monkey had stakes in Comcast Corporation (NASDAQ:CMCSA). The most significant stake ($1.42 billion) in Comcast Corporation (NASDAQ:CMCSA) is owned by Jean-Marie Eveillard’s First Eagle Investment Management.

ClearBridge Large Cap Value Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q3 2023 investor letter:

“Long-term holdings Charter and Comcast Corporation (NASDAQ:CMCSA) delivered strong second-quarter results relative to expectations; their stable recurring revenue streams and undemanding valuations were rewarded in the current environment. Cable multiples compressed over the past 24 months on fears of heightened competition in their core broadband business from fixed wireless and fiber providers. While fiber remains a competitive alternative to cable broadband over the long term, high upfront investments and a materially higher cost of capital are resulting in slower buildouts than previously expected. Fixed wireless also continues to gain traction, particularly in rural markets, but share gains also appear to be moderating. At the same time, both Comcast and Charter are expanding their footprints into rural and adjacent markets while gaining wireless market share, leveraging their mobile virtual network operator agreements with Verizon. We think both cable companies are well-positioned to continue to grow while generating substantial free cash flows. We added to Comcast during the quarter.”

7. Freeport-McMoRan Inc (NYSE:FCX)

Number of Hedge Fund Investors: 73

Freeport-McMoRan Inc (NYSE:FCX) is one of the stocks that has the potential to gain a lot in value over the next few years, according to Sarat Sethi, DCLA managing partner. The analyst said while talking to CNBC that Freeport-McMoRan Inc (NYSE:FCX) is set to gain on the back of an increase in demand for EVs and copper.

As of the end of the third quarter of 2023, 73 hedge funds tracked by Insider Monkey had stakes in the company. Like FCX, hedge funds are loading up on Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and NVIDIA Corp (NASDAQ:NVDA).

6. Tesla Inc (NASDAQ:TSLA)

Number of Hedge Fund Investors: 81

Tesla Inc (NASDAQ:TSLA) is perhaps one of the most divisive stocks out there, with some analysts saying the stock will fall while others saying the stock would skyrocket.

Cathie Wood of ARK Invest believes Tesla Inc (NASDAQ:TSLA) could hit $2000 by 2027. Wedbush's Dan Ives, who is also a notable Tesla Inc (NASDAQ:TSLA) bull, recently said in a program on CNBC that there are signs that demand for Tesla Inc (NASDAQ:TSLA) vehicles remains strong. He said that it’s important to differentiate between demand trends in the broader EV industry and demand for Tesla Inc (NASDAQ:TSLA) vehicles. In addition to Tesla, Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and NVIDIA Corp (NASDAQ:NVDA) are among the top stocks hedge funds and Wall Street analysts are buying.

Here is what White Brook Capital has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2023 investor letter:

“The magnificent seven, that underpin the S&P 500 performance, which includes Tesla, Inc. (NASDAQ:TSLA), now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth. Small and midcap stocks, on the other hand, have been systemically penalized by fears of recession and continue to price that eventuality even as significantly better outcomes have become more probable. Today, it’s relatively easy to find attractive investments in this segment.”

 

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Wall Street analysts forecast that Freeport-McMoRan (FCX) will report quarterly earnings of $0.23 per share in its upcoming release, pointing to a year-over-year decline of 55.8%. It is anticipated that revenues will amount to $5.84 billion, exhibiting an increase of 1.5% compared to the year-ago quarter.

Over the last 30 days, there has been a downward revision of 0.6% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.

Before a company announces its earnings, it is essential to take into account any changes made to earnings estimates. This is a valuable factor in predicting the potential reactions of investors toward the stock. Empirical research has consistently shown a strong correlation between trends in earnings estimate revisions and the short-term price performance of a stock.

While investors usually depend on consensus earnings and revenue estimates to assess the business performance for the quarter, delving into analysts' forecasts for certain key metrics often provides a more comprehensive understanding.

With that in mind, let's delve into the average projections of some Freeport-McMoRan metrics that are commonly tracked and projected by analysts on Wall Street.

Analysts forecast 'Revenues- Indonesia' to reach $2.62 billion. The estimate indicates a change of +16.9% from the prior-year quarter.

According to the collective judgment of analysts, 'Revenues- Molybdenum' should come in at $231.93 million. The estimate indicates a change of +39.7% from the prior-year quarter.

It is projected by analysts that the 'Revenues- South America copper mines' will reach $1.11 billion. The estimate indicates a change of -18.3% from the prior-year quarter.

Analysts expect 'Revenues- North America copper mines' to come in at $1.34 billion. The estimate points to a change of -8.2% from the year-ago quarter.

The average prediction of analysts places 'Sales in thousands of ounces – Gold – Consolidated basis' at 584.29 Koz. Compared to the present estimate, the company reported 458 Koz in the same quarter last year.

The collective assessment of analysts points to an estimated 'Production in millions of pounds – Molybdenum – South America' of 5.54 Mlbs. Compared to the present estimate, the company reported 5 Mlbs in the same quarter last year.

Based on the collective assessment of analysts, 'Production in millions of pounds – Molybdenum – By-product – North America' should arrive at 6.93 Mlbs. Compared to the current estimate, the company reported 7 Mlbs in the same quarter of the previous year.

The consensus estimate for 'Sales in thousands of Ounces – Gold – Indonesia' stands at 580.34 Koz. The estimate is in contrast to the year-ago figure of 455 Koz.

Analysts' assessment points toward 'Sales in thousands of Ounces – Gold – North America' reaching 3.94 Koz. The estimate is in contrast to the year-ago figure of 3 Koz.

Analysts predict that the 'Sales in millions of pounds – Copper – Indonesia – Grasberg' will reach 474.95 Mlbs. Compared to the present estimate, the company reported 387 Mlbs in the same quarter last year.

The consensus among analysts is that 'Average realized price per ounce – Gold' will reach $1,934.59. The estimate is in contrast to the year-ago figure of $1,789.

The combined assessment of analysts suggests that 'Average realized price per pound – Molybdenum' will likely reach $20.84. The estimate compares to the year-ago value of $18.94.View all Key Company Metrics for Freeport-McMoRan here>>>Shares of Freeport-McMoRan have demonstrated returns of -9.5% over the past month compared to the Zacks S&P 500 composite's +0.9% change. With a Zacks Rank #3 (Hold), FCX is expected to mirror the overall market performance in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report

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Zacks Investment Research

Freeport-McMoRan Inc. FCX is set to release fourth-quarter 2023 results before the opening bell on Jan 24.The mining giant’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 21.9%, on average. Freeport is expected to have gained from its efforts to increase mining rates, the strength in copper prices and lower costs in the fourth quarter.The stock has lost 15.9% in the past year compared with the industry’s 10.8% decline.

 

Zacks Investment Research

Image Source: Zacks Investment Research

Let’s see how things are shaping up for this announcement.

 

What do the Estimates Indicate?

For the fourth quarter of 2023, Freeport expects sales volumes to be 1.1 billion pounds of copper, 580,000 ounces of gold and 20 million pounds of molybdenum.The Zacks Consensus Estimate for Freeport’s fourth-quarter consolidated revenues is currently pegged at $5,844.3 million, which suggests a year-over-year increase of 1.5%.

A Few Factors to Watch

Freeport is likely to have benefited from improved costs in the fourth quarter. It is seeing improving trends for several of its commodity-based input costs and remains focused on managing costs and improve productivity. Our estimate for fourth-quarter consolidated net cash costs per pound of copper currently stands at $1.58, which indicates a sequential decrease of 8.7%.Moreover, continued strong performance at PT Freeport Indonesia and efforts to increase operating rates at Cerro Verde and El Abra mines are likely to have aided the company’s copper volumes in the quarter to be reported. FCX is expected to have witnessed improved volumes in its Grasberg operations in the December quarter on higher mining rates and ore grades. The company is also likely to have benefited from higher milling rates in South America. Our estimate for consolidated copper sales for the fourth quarter is 1,085 million pounds.Freeport’s fourth-quarter results are also expected to have been supported by the strength in copper prices. Copper prices had started 2023 on a strong note, fueled by investor expectations of a surge in demand after the reopening of the China economy from COVID-led restrictions. However, softer demand from China and global economic concerns weighed on copper prices during the second quarter.Copper started the third quarter on a positive note amid expectations that demand in China will improve, backed by stimulus measures from the government, but closed the quarter lower on worries over China’s real estate sector. However, prices of the red metal moved higher in the fourth quarter and hit a three-month high in early December on supply disruptions (partly due to the Panama copper mine closure), better-than-expected data from China, a weaker dollar and prospects of interest rate cuts. Copper maintained the momentum through December and ended the year on a high note amid concerns over supply constraints.

 

Freeport-McMoRan Inc. Price and EPS Surprise

 

Freeport-McMoRan Inc. Price and EPS Surprise

Freeport-McMoRan Inc. price-eps-surprise | Freeport-McMoRan Inc. Quote

 Zacks Model

Our proven model does not conclusively predict an earnings beat for Freeport this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.Earnings ESP: Earnings ESP for Freeport is -8.72%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: Freeport currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:Carpenter Technology Corporation CRS, scheduled to release earnings on Jan 25, has an Earnings ESP of +0.89% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for CRS’s earnings for the fiscal second quarter is currently pegged at 85 cents.Barrick Gold Corporation GOLD, slated to release earnings on Feb 14, has an Earnings ESP of +3.99% and carries a Zacks Rank #3 at present.The consensus mark for GOLD’s fourth-quarter earnings is currently pegged at 23 cents.Kinross Gold Corporation KGC, scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +25.00%.The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report

Kinross Gold Corporation (KGC) : Free Stock Analysis Report

Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

Barrick Gold Corporation (GOLD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The board of Southern Copper Corporation (NYSE:SCCO) has announced that the dividend on 22nd of November will be increased to $1.00, which will be 100% higher than last year's payment of $0.50 which covered the same period. This will take the annual payment to 5.0% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Southern Copper

Southern Copper Is Paying Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Southern Copper's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 102% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.

The next 12 months is set to see EPS grow by 11.3%. If the dividend continues on its recent course, the payout ratio in 12 months could be 111%, which is a bit high and could start applying pressure to the balance sheet.

historic-dividendDividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the dividend has gone from $0.68 total annually to $3.50. This means that it has been growing its distributions at 18% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Dividend Growth Could Be Constrained

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Southern Copper has been growing its earnings per share at 23% a year over the past five years. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

Southern Copper's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Southern Copper's payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Southern Copper has 3 warning signs (and 2 which are potentially serious) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term Southern Copper Corporation (NYSE:SCCO) shareholders have enjoyed a 74% share price rise over the last half decade, well in excess of the market return of around 44% (not including dividends).

Although Southern Copper has shed US$3.8b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Southern Copper

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over half a decade, Southern Copper managed to grow its earnings per share at 23% a year. This EPS growth is higher than the 12% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Southern Copper, it has a TSR of 125% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Southern Copper shareholders have received a total shareholder return of 67% over one year. Of course, that includes the dividend. That's better than the annualised return of 18% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example – Southern Copper has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

But note: Southern Copper may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Southern Copper Corporation (NYSE:SCCO) will increase its dividend from last year's comparable payment on the 23rd of August to $1.00. This will take the dividend yield to an attractive 4.1%, providing a nice boost to shareholder returns.

See our latest analysis for Southern Copper

Southern Copper Is Paying Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, the company's dividend was much higher than its earnings. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

The next 12 months is set to see EPS grow by 6.7%. If the dividend continues on its recent course, the payout ratio in 12 months could be 105%, which is a bit high and could start applying pressure to the balance sheet.

historic-dividendDividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $3.71 in 2013, and the most recent fiscal year payment was $3.50. Payments have been decreasing at a very slow pace in this time period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Southern Copper Might Find It Hard To Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Southern Copper has grown earnings per share at 25% per year over the past five years. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

The Dividend Could Prove To Be Unreliable

In summary, while it's always good to see the dividend being raised, we don't think Southern Copper's payments are rock solid. Strong earnings growth means Southern Copper has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Southern Copper (1 shouldn't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Copper prices are still well below their February highs but SCCO just made a new 52-week high. What gives?

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

2 Stocks to Add to Your Watchlist

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.

The final step today is to look at a stock that meets our ESP qualifications. Steel Dynamics (STLD) earns a Zacks Rank #3 29 days from its next quarterly earnings release on July 19, 2023, and its Most Accurate Estimate comes in at $5.11 a share.

By taking the percentage difference between the $5.11 Most Accurate Estimate and the $5.10 Zacks Consensus Estimate, Steel Dynamics has an Earnings ESP of 0.2%.

STLD is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Southern Copper (SCCO).

Southern Copper, which is readying to report earnings on July 25, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.03 a share, and SCCO is 35 days out from its next earnings report.

Southern Copper's Earnings ESP figure currently stands at 10.36% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.93.

Because both stocks hold a positive Earnings ESP, STLD and SCCO could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Zacks Investment Research

Investors interested in Mining – Non Ferrous stocks are likely familiar with Amerigo Resources (ARREF) and Southern Copper (SCCO). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Amerigo Resources has a Zacks Rank of #1 (Strong Buy), while Southern Copper has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ARREF has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ARREF currently has a forward P/E ratio of 9.83, while SCCO has a forward P/E of 18.69. We also note that ARREF has a PEG ratio of 0.49. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SCCO currently has a PEG ratio of 15.57.

Another notable valuation metric for ARREF is its P/B ratio of 1.65. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SCCO has a P/B of 7.03.

These are just a few of the metrics contributing to ARREF's Value grade of B and SCCO's Value grade of D.

ARREF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ARREF is likely the superior value option right now.

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Amerigo Resources Ltd. (ARREF) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Zacks Investment Research

Southern Copper (NYSE:SCCO) has had a great run on the share market with its stock up by a significant 8.1% over the last month. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Specifically, we decided to study Southern Copper's ROE in this article.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

See our latest analysis for Southern Copper

How Is ROE Calculated?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Southern Copper is:

33% = US$2.7b ÷ US$8.2b (Based on the trailing twelve months to March 2023).

The 'return' is the yearly profit. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.33.

What Is The Relationship Between ROE And Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

A Side By Side comparison of Southern Copper's Earnings Growth And 33% ROE

First thing first, we like that Southern Copper has an impressive ROE. Second, a comparison with the average ROE reported by the industry of 13% also doesn't go unnoticed by us. Under the circumstances, Southern Copper's considerable five year net income growth of 24% was to be expected.

As a next step, we compared Southern Copper's net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 31% in the same period.

past-earnings-growth

Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. If you're wondering about Southern Copper's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Southern Copper Using Its Retained Earnings Effectively?

Southern Copper's significant three-year median payout ratio of 84% (where it is retaining only 16% of its income) suggests that the company has been able to achieve a high growth in earnings despite returning most of its income to shareholders.

Additionally, Southern Copper has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 80% of its profits over the next three years. Accordingly, forecasts suggest that Southern Copper's future ROE will be 34% which is again, similar to the current ROE.

Summary

In total, it does look like Southern Copper has some positive aspects to its business. Its earnings growth is decent, and the high ROE does contribute to that growth. However, investors could have benefitted even more from the high ROE, had the company been reinvesting more of its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about… and every practical investor I know worries about.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Southern Copper Corporation (NYSE:SCCO) does carry debt. But is this debt a concern to shareholders?

When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

View our latest analysis for Southern Copper

What Is Southern Copper's Debt?

The image below, which you can click on for greater detail, shows that Southern Copper had debt of US$6.25b at the end of March 2023, a reduction from US$6.55b over a year. On the flip side, it has US$2.44b in cash leading to net debt of about US$3.81b.

debt-equity-history-analysisA Look At Southern Copper's Liabilities

The latest balance sheet data shows that Southern Copper had liabilities of US$1.25b due within a year, and liabilities of US$7.89b falling due after that. On the other hand, it had cash of US$2.44b and US$1.33b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$5.37b.

Given Southern Copper has a humongous market capitalization of US$51.8b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward.

In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Southern Copper has a low net debt to EBITDA ratio of only 0.74. And its EBIT covers its interest expense a whopping 15.2 times over. So we're pretty relaxed about its super-conservative use of debt. In fact Southern Copper's saving grace is its low debt levels, because its EBIT has tanked 30% in the last twelve months. When it comes to paying off debt, falling earnings are no more useful than sugary sodas are for your health. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Southern Copper can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So it's worth checking how much of that EBIT is backed by free cash flow. Over the most recent three years, Southern Copper recorded free cash flow worth 56% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Our View

Southern Copper's EBIT growth rate was a real negative on this analysis, although the other factors we considered were considerably better. There's no doubt that its ability to to cover its interest expense with its EBIT is pretty flash. When we consider all the elements mentioned above, it seems to us that Southern Copper is managing its debt quite well. But a word of caution: we think debt levels are high enough to justify ongoing monitoring. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Southern Copper (of which 2 are a bit unpleasant!) you should know about.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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BHP Group BHP has collaborated with Microsoft MSFT to use new digital technology such as Artificial Intelligence, machine learning and cloud technologies to improve copper recovery at the Escondida operation in Chile.The Escondida mine is the world's largest producer of copper concentrates and cathodes. BHP owns 57.5% of the mine while the remaining stake is held by Rio Tinto plc RIO (30%) and Japan-based JECO Corp (12.5%). Escondida’s two pits feed three concentrator plants, as well as two leaching operations (oxide and sulphide). It produced more than 1 million metric tons of copper per year. The concentrator circuit is responsible for extracting, floating and collecting the copper mineral from crushed and milled ore.Through this collaboration, by using real-time plant data from the concentrators combined with AI-based recommendations from Microsoft’s Azure platform, the concentrator operators at Escondida will now be able to adjust operational variables that affect ore processing and grade recovery.  Mining is a long, complex and capital-intensive process. Significant exploration and development to evaluate the size of the deposit, followed by the assessment of ways to extract and process the ore efficiently, safely and responsibly, precede actual mining.Finding and building new mines are costly as well as difficult and can take more than a decade. With declining grades at existing copper mines and the lack of new economic and promising discoveries, miners are resorting to next-generation technologies like artificial intelligence, machine learning and data analytics to boost production and value from the existing mines.Copper is the third most consumed industrial metal in the world. It is expected to play a crucial role in the achievement of global clean energy transition. The increasing global awareness regarding cleaner energy and the surge in electric car sales will be a key catalyst for copper demand in the long term. The red metal is an essential component in EVs and is utilized in electric motors, batteries, inverters and wiring. According to the International Copper Association (“ICA”), while conventional cars contain 18 pounds to 49 pounds of copper, plug-in hybrid electric vehicles use 132 pounds of copper and battery electric vehicles contain 183 pounds of the metal.

BHP estimates that over the next three decades, the global copper output has to double compared to the past 30 years to meet the surging requirement of the metal stemming from global decarbonization efforts such as electric vehicles, offshore wind and solar farms. BHP and other miners like Rio Tinto and Southern Copper SCCO to name a few, are thus trying to boost their capacity to capitalize on this trend.  Southern Copper's Michiquillay project is expected to become one of Peru's largest copper mines and will produce 225,000 tons of copper per year (along with by-products of molybdenum, gold and silver) for an initial mine life of more than 25 years and at a competitive cash-cost. Production is expected to commence by 2032. The Los Chancas project located in Apurimac, Peru is a copper and molybdenum porphyry deposit. The project envisions an open-pit mine with a combined operation of the concentrator and SX-EW processes to produce 130,000 tons of copper and 7,500 tons of molybdenum annually. The project is expected to commence in 2030.

Price Performance

BHP Group's shares have fallen 20.2% over the past year, compared with the industry’s 25.2% decline.

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BHP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Southern Copper's (NYSE:SCCO) returns on capital, so let's have a look.

Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Southern Copper, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.27 = US$4.3b ÷ (US$17b – US$1.2b) (Based on the trailing twelve months to March 2023).

Thus, Southern Copper has an ROCE of 27%. That's a fantastic return and not only that, it outpaces the average of 12% earned by companies in a similar industry.

Check out our latest analysis for Southern Copper

roce

Above you can see how the current ROCE for Southern Copper compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

The Trend Of ROCE

Southern Copper is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 27%. The amount of capital employed has increased too, by 25%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

The Bottom Line

In summary, it's great to see that Southern Copper can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with a respectable 76% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. Therefore, we think it would be worth your time to check if these trends are going to continue.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 4 warning signs for Southern Copper (of which 2 make us uncomfortable!) that you should know about.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Southern Copper (SCCO) has been beaten down lately with too much selling pressure. While the stock has lost 13.9% over the past four weeks, there is light at the end of the tunnel as it is now in oversold territory and Wall Street analysts expect the company to report better earnings than they predicted earlier.

How to Determine if a Stock is Oversold

We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements.

RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30.

Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and easily check if a stock's price is reaching a point of reversal.

So, by this measure, if a stock has gotten too far below its fair value just because of unwarranted selling pressure, investors may start looking for entry opportunities in the stock for benefitting from the inevitable rebound.

However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision.

Why SCCO Could Bounce Back Before Long

The heavy selling of SCCO shares appears to be in the process of exhausting itself, as indicated by its RSI reading of 28.56. So, the trend for the stock could reverse soon for reaching the old equilibrium of supply and demand.

The RSI value is not the only factor that indicates a potential turnaround for the stock in the near term. On the fundamental side, there has been strong agreement among the sell-side analysts covering the stock in raising earnings estimates for the current year. Over the last 30 days, the consensus EPS estimate for SCCO has increased 3.2%. And an upward trend in earnings estimate revisions usually translates into price appreciation in the near term.

Moreover, SCCO currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises. This is a more conclusive indication of the stock's potential turnaround in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Looking at Southern Copper Corporation's (NYSE:SCCO ) insider transactions over the last year, we can see that insiders were net sellers. That is, there were more number of shares sold by insiders than there were purchased.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Southern Copper

The Last 12 Months Of Insider Transactions At Southern Copper

The Independent Director, Vicente Ariztegui Andreve, made the biggest insider sale in the last 12 months. That single transaction was for US$114k worth of shares at a price of US$76.11 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$78.65. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 25% of Vicente Ariztegui Andreve's holding. Vicente Ariztegui Andreve was the only individual insider to sell shares in the last twelve months.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Southern Copper Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Southern Copper. In total, Independent Director Vicente Ariztegui Andreve sold US$114k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.08% of Southern Copper shares, worth about US$47m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Southern Copper Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Southern Copper. Be aware that Southern Copper is showing 3 warning signs in our investment analysis, and 1 of those can't be ignored…

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Southern Copper (NYSE:SCCO) has had a great run on the share market with its stock up by a significant 9.1% over the last month. Since the market usually pay for a company’s long-term fundamentals, we decided to study the company’s key performance indicators to see if they could be influencing the market. In this article, we decided to focus on Southern Copper’s ROE.

Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.

Check out our latest analysis for Southern Copper

How To Calculate Return On Equity?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Southern Copper is:

33% = US$2.6b ÷ US$8.1b (Based on the trailing twelve months to December 2022).

The ‘return’ is the income the business earned over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.33 in profit.

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or “retain”, we are then able to evaluate a company’s future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.

Southern Copper’s Earnings Growth And 33% ROE

Firstly, we acknowledge that Southern Copper has a significantly high ROE. Additionally, the company’s ROE is higher compared to the industry average of 17% which is quite remarkable. As a result, Southern Copper’s exceptional 26% net income growth seen over the past five years, doesn’t come as a surprise.

Next, on comparing Southern Copper’s net income growth with the industry, we found that the company’s reported growth is similar to the industry average growth rate of 31% in the same period.

past-earnings-growth

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). Doing so will help them establish if the stock’s future looks promising or ominous. If you’re wondering about Southern Copper’s’s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Southern Copper Using Its Retained Earnings Effectively?

Southern Copper’s significant three-year median payout ratio of 83% (where it is retaining only 17% of its income) suggests that the company has been able to achieve a high growth in earnings despite returning most of its income to shareholders.

Moreover, Southern Copper is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Upon studying the latest analysts’ consensus data, we found that the company is expected to keep paying out approximately 74% of its profits over the next three years. As a result, Southern Copper’s ROE is not expected to change by much either, which we inferred from the analyst estimate of 29% for future ROE.

Summary

Overall, we are quite pleased with Southern Copper’s performance. We are particularly impressed by the considerable earnings growth posted by the company, which was likely backed by its high ROE. While the company is paying out most of its earnings as dividends, it has been able to grow its earnings in spite of it, so that’s probably a good sign. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. Are these analysts expectations based on the broad expectations for the industry, or on the company’s fundamentals? Click here to be taken to our analyst’s forecasts page for the company.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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For Immediate Release

Chicago, IL – March 2, 2023 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:  https://www.zacks.com/stock/news/2060610/which-commodity-stocks-should-be-on-your-short-list

Which Commodity Stocks Should Be on Your Short List?

Welcome to Episode #350 of the Zacks Market Edge Podcast.

• (3:00) – Breaking Down Oil’s Current Performance: What Should Investors Expect Going Forward?

• (11:50) – The Smart Metal: What Is Copper Telling Us About The Economy?

• (16:35) – Is Steel A Good Long Term Investment?

• (20:40) – What Should Investors Know About Chicken: The Wing Stop Story

• (28:40) – What Commodity Trends Should You Be Keeping On Your Radar?

• (32:15) – Episode Roundup: PXD, RRC, ROCC, APA, FANG, LNG, FCX, SCCO, CLF, NUE, WING, GDX, GDXJ

• Podcast@Zacks.com

 

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey tapped the knowledge and expertise of the editor of the Zacks Commodity Innovator newsletter, Jeremy Mullin, to take a deep dive into what is going on in commodities in 2023. In 2022, commodities went on a wild ride as the Ukraine War caused many commodities to spike higher. Some, like oil, traded at 10-year highs.

But many of those commodities have since fallen back to pre-Ukraine War levels. Are there buying opportunities in some of those stocks?

5 Commodity Stocks to Watch in 2023

1.      Cheniere Energy (LNG)

Cheniere Energy is a large-cap liquid natural gas producer headquartered in Houston. Earnings are expected to jump 165% in 2023 to $14.95 from $5.64.

Shares are up 22% over the last year and have recently rallied 6.6% in the last 5 sessions. Cheniere is cheap, with a forward P/E of just 10.6.

Cheniere also pays a dividend, currently yielding 1%.

Should a liquid natural gas producer like Cheniere be on your watch list?

2.      Freeport-McMoran (FCX)

Freeport-McMoran is a copper producer. Copper prices came down from their Ukraine War highs but are now back over $4.00 per pound again.

Shares of Freeport-McMoran are down 13.4% over the last year but in 2023, they have rallied 8%. Freeport is trading at 20x forward earnings. It pays a dividend yielding 1.5%.

Is it time for copper and Freeport-McMoran in 2023?

3.      Southern Copper Corp. (SCCO)

Southern Copper is a large cap copper producer. The Zacks Consensus Estimate for 2023 is calling for $3.40, which is down only a penny from 2022’s earnings of $3.41.

Shares of Southern Copper have rallied 22.3% year-to-date. It trades with a forward P/E of 21.

But many investors like Southern Copper because of its generous dividend, which is currently yielding 4.8%.

Should Southern Copper be on your commodities stock short list?

4.      Cleveland-Cliffs Inc. (CLF)

Cleveland-Cliffs is the largest flat-rolled steel producer in North America.

Shares of Cleveland-Cliffs are up 33% year-to-date but are still cheap, with a forward P/E of 12.9. Earnings are expected to fall 47.5%, however, to $1.60 from $3.05 last year.

Cleveland-Cliffs is one of Jeremy’s favorite steel stocks.

Should Cleveland-Cliffs also be on your short list?

5.      Wingstop Inc. (WING)

Wingstop operates 1950 locations worldwide. How did a restaurant chain get into a podcast about commodities? Chicken wings. The price of chicken wings has come down from 2022 highs, which is boosting Wingstop’s margins.

Shares of Wingstop are up 24.7% year-to-date. It’s not cheap, with a forward P/E of 91. Jeremy believes it can grow into the valuation, however.

Wingstop does pay a dividend, currently yielding 0.4%.

Is Wingstop a hidden commodities stock in 2023?

What Else do you Need to Know About Commodities in 2023?

Listen to this week’s podcast to find out.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report

Cleveland-Cliffs Inc. (CLF) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Wingstop Inc. (WING) : Free Stock Analysis Report

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Southern Copper Corporation SCCO is likely to register a year-over-year decline in earnings in its fourth-quarter 2022 results next week. Lower production levels, and a drop in copper and silver prices, as well as inflated costs, are expected to have weighed on the performance.

Q3 Results

In the last reported quarter, the company’s earnings and sales declined year over year. While revenues missed the Zacks Consensus Estimate, earnings beat the same. Over the past four quarters, SCCO surpassed earnings estimates in two quarters and missed in the other two, resulting in a negative average surprise of 5.45%.

Q4 Estimates

The Zacks Consensus Estimate for SCCO’s fourth-quarter 2022 earnings per share is pegged at 82 cents, indicating a decline of 24% from the prior-year quarter’s reported figure. The estimate has moved up 4% over the past 30 days. The consensus mark for the quarter’s revenues stands at $2.53 billion, suggesting a year-over-year decline of 10.5%.

Southern Copper Corporation Price and EPS Surprise

 

Southern Copper Corporation Price and EPS Surprise

Southern Copper Corporation price-eps-surprise | Southern Copper Corporation Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Southern Copper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.Earnings ESP: The Earnings ESP for Southern Copper is -1.83%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: Southern Copper currently sports a Zacks Rank of 1.

Key Factors

Copper accounts for more than 80% of the company’s sales. Over the past few quarters, SCCO has been witnessing lower production at its Peruvian mines due to lower ore grades. This trend is expected to have continued in 2022 and the fourth quarter was not an exception. Copper prices were on a downtrend throughout the fourth quarter, weighed down by uncertainties surrounding the global economy as new coronavirus restrictions in China affected the demand for the red metal, thus hurting prices. Prices were also impacted by the spike in energy costs and low global inventories.Silver prices have also been negatively impacted this year, weighed down by the stronger U.S. dollar, rising interest rates and sluggish growth. SCCO has also been facing higher costs for diesel and fuel, operating and repair materials, supplies, and energy, as well as higher labor costs.Overall, lower production levels, lower copper and silver prices, as well as elevated costs are expected to reflect on the company’s earnings in the to-be-reported quarter. Savings from the company’s stringent cost-control measures are likely to have negated some of the impacts.

Share Price Performance

 

Zacks Investment Research

Image Source: Zacks Investment Research

 

The company’s shares have gained 16.7% over the past year compared with the industry’s 37.1% growth.

Stocks to Consider

Here are some Basic Materials stocks, which, according to, our model, have the right combination of elements to post an earnings beat in their upcoming releases.Air Products and Chemicals APD, scheduled to release fourth quarter 2022 earnings on Feb 2, has an Earnings ESP of +2.67% and currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Air Products’ fourth-quarter earnings has been revised 0.4% upward in the past 60 days. The consensus estimate for APD’s earnings for the fourth quarter is pegged at $2.73.Teck Resources TECK, expected to release fourth-quarter earnings on Feb 23, has an Earnings ESP of +3.48%.The Zacks Consensus Estimate for Teck’s fourth-quarter earnings is pegged at 94 cents. TECK currently carries a Zacks Rank of 2.Albemarle ALB, scheduled to release fourth-quarter 2022 earnings on Feb 15, has an Earnings ESP of +7.16% and a Zacks Rank of 3.The Zacks Consensus Estimate for ALB’s fourth-quarter earnings has moved north 3% in the past 60 days. The consensus mark is pegged at $7.89.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Considering Southern Copper has not realized below-30% volatility over a 50-day period in the last two years, these options appear cheap.