Buy Or Fear Freeport Stock?
Freeport-McMoRan (NYSE:FCX)[1] has risen 19% year-to-date, but the stock increasingly looks Unattractive given its moderate operating performance and financial condition. Despite strength in copper pricing and improving demand trends from electrification and renewable energy, the company's operational leverage makes it highly exposed to commodity swings, and even modest pullbacks in copper prices could weigh heavily on earnings. In Q2 2025, Freeport-McMoRan reported revenue of £6.6 billion, down 5% year-over-year as realized copper prices eased from last year's peak levels.
Net income came in at £970 million, a 19% decline, while adjusted EBITDA of £1.8 billion also trailed prior-year results. Free cash flow narrowed to £450 million, pressured by softer pricing and elevated mining costs. The balance sheet carries £9.5 billion in debt against £1.3 billion in cash, leaving modest flexibility in the event of a downturn.
Copper sales volumes were relatively steady, with strength in Asia and electric vehicle supply chains offset by weaker shipments into traditional construction and infrastructure, highlighting the company's cyclical and commodity-sensitive profile. Separately, see -ServiceNow Stock To Less Than £450?[2] But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio[3] is designed to reduce stock-specific risk while giving upside exposure.
[1] Valuation Looks Very High
Freeport trades at a steep premium to the market. Its price-to-earnings ratio is 33.5, substantially higher than the S&P 500's 24.
On free cash flows as well, the company is trading at 38.1x compared to the S&P500's 21.4x.
[2] Growth Is Moderate
Freeport's growth has been moderate. Over the past three years, revenues have increased at an average annual rate of 2.5% versus 5.3% for the S&P 500. In the last twelve months, sales increased 4.6% from £25 billion to £26 billion, and most recently, quarterly revenue increased 14.5% year-over-year to 7.6 billion.
By comparison, the index grew over 6.1%.
[3] Profitability Appears Moderate
Over the past year, Freeport generated £6.9 billion in operating income, a 26.8% margin, alongside £6.6 billion in operating cash flow (25.4% margin), and £1.9 billion in net income (7.5% margin). Freeport's operating and cash flow margins are higher than the S&P500 while net margins are lower, which stands at 18.86, 20.2%, and 12.7%, respectively, for the index.
[4] Financial Stability Looks Strong
Freeport carries relatively low debt but a negligible cash balance. Its debt-to-equity ratio is 14.4%, below the S&P 500 average of 20.3%.
Meanwhile, cash makes up 7.9% of total assets, compared with 7.2% for the index.
[5] Downturn Resilience Looks Very Weak
FCX has fared worse than the S&P 500 index during various economic downturns. In the 2022 inflation shock, FCX stock fell 51.7% vs. a peak-to-trough decline of 25.4% for the S&P 500. Additionally, in the 2020 Covid pandemic crisis, FCX stock fell 60.8% vs. a peak-to-trough decline of 33.9% for the S&P 500.
Looking for Smarter Alternatives?
Freeport combines very high valuation with weak growth along with moderate profitability.
Even at its low valuation, it makes the stock volatile, and currently unattractive for investors.
You could explore the Trefis Reinforced Value (RV) Portfolio[4], which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics[5].
References
- ^ Freeport-McMoRan (NYSE:FCX) (www.trefis.com)
- ^ ServiceNow Stock To Less Than £450? (www.forbes.com)
- ^ Trefis High Quality Portfolio (www.trefis.com)
- ^ Reinforced Value (RV) Portfolio (www.trefis.com)
- ^ RV Portfolio performance metrics (www.trefis.com)