Freeport-McMoRan (NYSE: FCX), one of the world’s largest copper producers, reported underwhelming Q4 2024 results. Revenue declined by 3.1% year-over-year to $5.72 billion, while earnings per share dropped 42% to $0.19. Following the announcement, the stock fell by approximately 12% but has since seen some recovery. While near-term performance may be affected by cost pressures and supply disruptions, the company’s long-term outlook remains positive due to strong copper demand and potential cost-saving initiatives. We estimate the fair value of Freeport-McMoRan stock to be around $46 per share, representing a 19% upside from current levels.
How Did FCX Perform in Q4?
Although electrification trends and AI infrastructure spending supported demand, traditional industries such as residential construction and automotive manufacturing saw weakness, leading to lower sales. The Grasberg mine in Indonesia produced 376 million pounds of copper, falling short of expectations due to operational issues, including ongoing smelter problems. Additionally, regulatory delays impacted Indonesian copper exports, as FCX received late approvals in Q4 2024, which affected shipment volumes. Copper prices remained relatively strong, but macroeconomic factors such as a strong U.S. dollar, trade uncertainties, and slower-than-expected Chinese growth created challenges. For the full year 2024, FCX reported $25.5 billion in revenue, up 11% from 2023, while net income rose just 2.6% to $1.89 billion. Profit margins declined to 7.4% from 8.1%, impacted by rising costs in North America, where unit net cash costs reached $3.04 per pound, significantly higher than Indonesia’s $1.66 per pound. For those seeking a smoother investment ride than individual stocks, consider the High Quality Portfolio, which has outperformed the S&P 500, delivering over 91% returns since inception.
What Does This Mean for FCX Stock?
FCX’s stock performance over the past four years has been volatile compared to the S&P 500, with annual returns of 61% in 2021, -7% in 2022, 14% in 2023, and -10% in 2024. By contrast, the Trefis High Quality Portfolio, which includes 30 stocks, has demonstrated lower volatility while consistently outperforming the S&P 500.
Why is that? HQ Portfolio stocks tend to offer better returns with reduced risk compared to the benchmark index, resulting in a steadier investment journey. This trend is evident in the HQ Portfolio performance metrics. Given today’s uncertain macroeconomic climate, including potential rate cuts and ongoing global conflicts, could FCX face another challenging year similar to 2023 and 2024, or is a strong rebound on the horizon?
Despite recent difficulties, FCX remains optimistic about long-term copper demand, particularly with global infrastructure investments and energy transition efforts fueling higher consumption. The company anticipates its Indonesian smelter to resume operations by mid-2025. For 2025, FCX projects sales of 4.0 billion pounds of copper, 1.6 million ounces of gold, and 88 million pounds of molybdenum, with operating cash flows estimated at $6.2 billion. U.S. copper production is expected to grow by 8% in 2025, with additional increases forecast for 2026 and 2027. Gold production for 2025 is projected to be 7% higher than previous estimates due to inventory drawdowns and slightly higher ore grades. While Q4 2024 results were impacted by lower ore grades and shipment delays, FCX remains committed to cost control, capital efficiency, and long-term expansion.
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