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Why Freeport-McMoRan (FCX) Stock Is Falling Today

Stocks in this article: FCX

NEW YORK (TheStreet) -- Shares of Freeport-McMoRan Inc. (FCX) are down -1.80% to $36.04 after it was reported that the natural resources company contacted potential buyers about selling its onshore oil wells in California, which could be worth up to $5 billion, sources told Reuters.

The company, which owns mines and oil wells worldwide, has been actively pursuing asset sales in order to reduce debt, which is over $20 billion.

Freeport is in the early stages of approaching prospective buyers, which could include other oil companies as well as private equity firms, sources added. 

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 TheStreet Ratings team rates FREEPORT-MCMORAN INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate FREEPORT-MCMORAN INC (FCX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 28.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, FCX's share price has jumped by 31.61%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 43.73% is the gross profit margin for FREEPORT-MCMORAN INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.72% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, FREEPORT-MCMORAN INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • FREEPORT-MCMORAN INC's earnings per share declined by 6.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, FREEPORT-MCMORAN INC reported lower earnings of $2.64 versus $3.18 in the prior year. For the next year, the market is expecting a contraction of 5.2% in earnings ($2.50 versus $2.64).
  • You can view the full analysis from the report here: FCX Ratings Report

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