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Why Freeport-McMoRan (FCX) Stock Is Declining In Pre-Market Trading Today

Stocks in this article: FCX

NEW YORK (TheStreet) -- Freeport-McMoRan (FCX) shares are down -0.9% to $36.02 in pre-market trading on Tuesday after being downgraded to "equal weight" from "overweight" by analysts at Morgan Stanley (MS) .

The downgraded outlook comes as the sale of the mining company's Chilean mine was delayed due to a lack of clarity with local officials involving a tax issue in the country.

The company is in talks with Lundin Mining  (LUNCF) to sell its copper mine in Candelaria for a reported $2 billion.

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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 good cash flow from operations. 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 greatly exceeded the industry average of 4.4%. 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 where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Metals & Mining industry average. The net income has remained constant at $482.00 million when compared to the same quarter one year ago.
  • 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 6.1% in earnings ($2.48 versus $2.64).
  • You can view the full analysis from the report here: FCX Ratings Report

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