NEW YORK (TheStreet) -- Shares of copper producer Freeport-McMoRan (FCX) rose 0.73% to $21.94 in morning trading Monday on news that BHP Billiton (BHP) and Rio Tinto (RIO) , two of the world's largest iron ore producers, are stockpiling massive copper supplies in order to take a piece of the $140 billion global copper market.
The two companies plan, in separate and joint ventures, to mine millions of additional tons of copper despite the expectations of an oversupplied market in the next few years, according to Reuters.
This move could be an attempt to push out high-cost producers, a strategy the two companies employed previously in the iron ore market, Reuters added.
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Separately, 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 reasonable valuation levels, good cash flow from operations and expanding profit margins. 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:
- Net operating cash flow has slightly increased to $1,926.00 million or 2.55% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -29.96%.
- 39.80% is the gross profit margin for FREEPORT-MCMORAN INC which we consider to be strong. Regardless of FCX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.69% trails the industry average.
- FREEPORT-MCMORAN INC's earnings per share declined by 32.9% 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 18.2% in earnings ($2.16 versus $2.64).
- 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 32.8% when compared to the same quarter one year ago, falling from $821.00 million to $552.00 million.
- You can view the full analysis from the report here: FCX Ratings Report