Returns On Capital Are Showing Encouraging Signs At Freeport-McMoRan (NYSE:FCX)
To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return.
Speaking of which, we noticed some great changes in Freeport-McMoRan's (NYSE:FCX[1]) returns on capital, so let's have a look.
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Understanding Return On Capital Employed (ROCE)
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Freeport-McMoRan is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ? (Total Assets - Current Liabilities)
0.13 = US£6.6b ? (US£56b - US£5.9b) (Based on the trailing twelve months to March 2025). Thus, Freeport-McMoRan has an ROCE of 13%. On its own, that's a standard return, however it's much better than the 9.8% generated by the Metals and Mining industry. Check out our latest analysis for Freeport-McMoRan[3]
NYSE:FCX Return on Capital Employed July 10th 2025
Above you can see how the current ROCE for Freeport-McMoRan compares to its prior returns on capital, but there's only so much you can tell from the past.
If you're interested, you can view the analysts predictions in our free analyst report for Freeport-McMoRan[4] .
How Are Returns Trending?
Freeport-McMoRan has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 13% which is a sight for sore eyes. Not only that, but the company is utilizing 35% more capital than before, but that's to be expected from a company trying to break into profitability.
This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.
The Bottom Line On Freeport-McMoRan's ROCE
To the delight of most shareholders, Freeport-McMoRan has now broken into profitability. Since the stock has returned a staggering 258% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Freeport-McMoRan can keep these trends up, it could have a bright future ahead.
Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for FCX[5] that compares the share price and estimated value. While Freeport-McMoRan may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity.
Check out this free list here.[6]
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Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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References
- ^ NYSE:FCX (simplywall.st)
- ^ This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. (simplywall.st)
- ^ Check out our latest analysis for Freeport-McMoRan (simplywall.st)
- ^ analyst report for Freeport-McMoRan (simplywall.st)
- ^ FREE intrinsic value estimation for FCX (simplywall.st)
- ^ list here. (simplywall.st)
- ^ Explore Now for Free (simplywall.st)
- ^ Get in touch (investor-research.typeform.com)