Why Freeport-McMoran Copper & Gold (FCX) Is Down Today

NEW YORK (TheStreet) -- Freeport-McMoran Copper & Gold  (FCX) fell 2.12% to $30.72, down 66 cents from its previous close of $31.38, at the close of the trading day on Tuesday amid news that the company's Indonesian copper and gold mine had cut ore production by approximately 60%.

The news comes two months after the miner ceased exports due to a dispute with the government on a new tax introduced on Jan. 12 that is part of a collection of new mining rules designed to force miners to build smelters and process raw materials within Indonesia.

Freeport has also stated that the milling rate has been half its normal rate at its Indonesian mine since mid-January, according to Reuters. Freeport also believes the tax breaches its contract. The company continues its talks with the government. 

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TheStreet Ratings team rates FREEPORT-MCMORAN COP&GOLD as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FREEPORT-MCMORAN COP&GOLD (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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 30.4%. 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.
  • Net operating cash flow has significantly increased by 89.40% to $2,396.00 million when compared to the same quarter last year. In addition, FREEPORT-MCMORAN COP&GOLD has also vastly surpassed the industry average cash flow growth rate of -50.21%.
  • The gross profit margin for FREEPORT-MCMORAN COP&GOLD is rather high; currently it is at 50.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.01% 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. When compared to other companies in the Metals & Mining industry and the overall market, FREEPORT-MCMORAN COP&GOLD's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 decreased by 4.8% when compared to the same quarter one year ago, dropping from $743.00 million to $707.00 million.
  • You can view the full analysis from the report here: FCX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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