Despite data that indicates U.S. crude production has declined in recent weeks, persistent output from other producers has maintained a global oversupply above 1 million barrels per day, The Wall Street Journal reports. Exacerbating the supply glut are concerns that an economic slowdown in China, the world's second-largest oil consumer, will hurt global demand.
Copper prices are also down this morning, ahead of data due out Thursday that is expected to show a decrease in September factory activity in China, the world's top metals consumer, Reuters reports.
WTI crude is down 1.27% to $45.12 per barrel, while Brent crude is decreasing 1.58% to $47.83 per barrel this morning, according to the CNBC.com index.
After hitting one-month lows earlier today, copper for September delivery is down 1.77% to $2.25 per pound on the COMEX this morning.
Freeport-McMoRan, based in Phoenix, is a natural resource company with an industry portfolio of mineral assets, oil and natural gas resources, and a production profile.
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 multiple 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 484.0% when compared to the same quarter one year ago, falling from $482.00 million to -$1,851.00 million.
- Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, FCX has a quick ratio of 0.58, 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.
- Net operating cash flow has decreased to $1,069.00 million or 22.87% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 69.96%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 486.95% 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