Freeport-McMoRan (FCX) Highlighted As Today's Perilous Reversal Stock
Trade-Ideas LLC identified Freeport-McMoRan ( FCX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Freeport-McMoRan as such a stock due to the following factors:
- FCX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $777.5 million.
- FCX has traded 6.6 million shares today.
- FCX is down 3.1% today.
- FCX was up 10.6% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in FCX with the Ticky from Trade-Ideas. See the FREE profile for FCX NOW at Trade-Ideas
More details on FCX: Freeport-McMoRan Inc., a natural resource company, acquires, explores, and develops mineral assets, and oil and natural gas resources. The company explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, as well as oil and gas. The stock currently has a dividend yield of 3%. Currently there are 2 analysts that rate Freeport-McMoRan a buy, 1 analyst rates it a sell, and 12 rate it a hold. The average volume for Freeport-McMoRan has been 52.5 million shares per day over the past 30 days. Freeport-McMoRan has a market cap of $15.8 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.72 and a short float of 14.6% with 2.62 days to cover. Shares are up 87% year-to-date as of the close of trading on Thursday.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
Analysis:
rates Freeport-McMoRan as a
. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 5.63 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FCX has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.18%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 40.75% 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.
- FREEPORT-MCMORAN INC's earnings per share declined by 40.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FREEPORT-MCMORAN INC reported poor results of -$11.21 versus -$1.27 in the prior year. This year, the market expects an improvement in earnings ($0.27 versus -$11.21).
- The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 69.1% when compared to the same quarter one year ago, falling from -$2,474.00 million to -$4,184.00 million.
- You can view the full Freeport-McMoRan Ratings Report.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
