Freeport (FCX) to Report Q2 Earnings: What's in the Offing?

Freeport-McMoRan Inc. FCX is set to release second-quarter 2021 results on before the opening bell on Jul 22.

The mining giant’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missed once and were in-line on the other occasion. It has a trailing four-quarter earnings surprise of roughly 54.6%, on average. Freeport’s second-quarter results are likely to reflect the benefits of higher copper prices and lower costs.

The stock has rallied 147.2% in the past year compared with the industry’s 78.6% rise.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

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

Zacks Model

Our proven model predicts an earnings beat for Freeport 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 earning beat.

Earnings ESP: Earnings ESP for Freeport is +0.41%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 73 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.

What do the Estimates Indicate?

For the second quarter, Freeport expects sales volumes to be 975 million pounds of copper, 330,000 ounces of gold and 21 million pounds of molybdenum.

The Zacks Consensus Estimate for Freeport’s second-quarter consolidated revenues is currently pegged at $5,827 million, which suggests a year-over-year rise of 90.8%.

The Zacks Consensus Estimate for second-quarter consolidated net cash costs per pound of copper is currently pegged at $1.38, which calls for 6.1% fall on a year-over-year basis. The same for average realized price for copper stands at $4.19 per pound, reflecting a 64.3% rise year over year.

Moreover, the consensus mark for consolidated copper sales for the second quarter is pegged at 975 million pounds, which suggests a year-over-year rise of 28.4%.

A Few Factors to Watch

Freeport is expected to have benefited from higher copper prices in the to-be-reported quarter. Copper has bounced back strongly after taking a beating in the earlier part of 2020 as the coronavirus pandemic ravaged the global economy. The widely-used industrial metal has witnessed a rally after plunging to multi-year lows in March 2020. The rebound has been backed by expectations of an economic recovery, supply chain disruptions associated with the pandemic, a recovery in industrial activities and a surge in demand from top consumer China. Notably, copper prices reached an all-time high of $4.90 per pound in May 2021.

The demand-supply imbalance pushed copper prices north in the June quarter and is expected to have boosted Freeport’s margins in the quarter. The company is also likely to have benefited from lower net cash costs for copper, aided by its continued focus on maintaining a low-cost position.

Higher sales volumes and lower mining costs contributed to a decline in net cash costs in the first quarter and the same is likely to have continued in the second quarter. The ramp-up of underground mining at PT Freeport Indonesia is also likely to have driven the company’s copper and gold sales volumes in the quarter to be reported.

FreeportMcMoRan Inc. Price and EPS Surprise

FreeportMcMoRan Inc. Price and EPS Surprise
FreeportMcMoRan Inc. Price and EPS Surprise

FreeportMcMoRan Inc. price-eps-surprise | FreeportMcMoRan Inc. Quote

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:

Dow Inc. DOW, scheduled to release earnings on Jul 22, has an Earnings ESP of +4.04% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot Corporation CBT, scheduled to release earnings on Aug 9, has an Earnings ESP of +14.81% and carries a Zacks Rank #1.

Nutrien Ltd. NTR, scheduled to release earnings on Aug 9, has an Earnings ESP of +0.57% and carries a Zacks Rank #1.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

FreeportMcMoRan Inc. (FCX) : Free Stock Analysis Report

Dow Inc. (DOW) : Free Stock Analysis Report

Cabot Corporation (CBT) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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