Freeport-McMoRan (FCX) Stock Tumbles with Copper, Oil Prices

Freeport-McMoRan (FCX) stock is falling alongside copper and oil prices in Thursday afternoon trading.
By Rachel Graf ,

NEW YORK (TheStreet) -- Freeport-McMoRan (FCX) - Get Report stock is down by 5.32% to $8.81 in afternoon trading on Thursday, as copper and oil prices decline today.

Freeport-McMoRan, based in Phoenix, is a natural resource company with an industry portfolio of mineral assets, oil and natural gas resources.

Oil prices are lower after data showed U.S. crude inventories climbed by 4.3 million barrels last week, according to the U.S. Energy Information Administration. Analysts were expecting a rise of 1.1 million barrels, the Wall Street Journal reports. 

Additionally, copper prices are being brought down by a strong dollar and concern about China's economy. The largest metal consumer's financial system fell to its lowest point in 15 months during October, Reuters reports. 

WTI crude is down 2.80% to $41.73 per barrel, while Brent crude is decreasing 2.99% to $44.44 per barrel this afternoon, according to the CNBC.com index.

Copper for December delivery is down 2.05% to $2.17 per pound on the COMEX this afternoon.

Separately, TheStreet Ratings team rates FREEPORT-MCMORAN INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate FREEPORT-MCMORAN INC (FCX) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 793.8% when compared to the same quarter one year ago, falling from $552.00 million to -$3,830.00 million.
  • Currently the debt-to-equity ratio of 1.89 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, FREEPORT-MCMORAN INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $822.00 million or 57.32% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FREEPORT-MCMORAN INC has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 775.47% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: FCX

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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