Buy Or Sell Freeport Stock At $45?
CHONGQING, CHINA - JULY 19: In this photo illustration, a person holds a smartphone displaying the logo of Freeport-McMoRan Inc. (NYSE: FCX), an American mining company primarily involved in the extraction of copper, gold, and molybdenum, with the company's stylized initials FCX visible in the background, on July 19, 2025 in Chongqing, China. (Photo illustration by Cheng Xin/Getty Images)Getty Images
Freeport-McMoRan (NYSE:FCX)[1] has increased by 19% year-to-date, but the stock is increasingly perceived as Unattractive due to its moderate operational performance and financial condition. While there is strength in copper prices and improving demand influenced by electrification and renewable energy trends, the company's operational leverage leaves it highly vulnerable to commodity fluctuations, and even slight declines in copper prices could significantly impact earnings. In Q2 2025, Freeport-McMoRan reported revenue of £6.6 billion, which is a 5% decrease year-over-year as realized copper prices have softened from last year's peak levels.
The net income was reported at £970 million, a decline of 19%, while adjusted EBITDA stood at £1.8 billion, also falling short of prior-year figures. Free cash flow decreased to £450 million, impacted by weaker pricing and high mining costs. The balance sheet shows £9.5 billion in debt versus £1.3 billion in cash, offering limited flexibility during a downturn.
Copper sales volumes remained relatively stable, with strength noted in Asia and electric vehicle supply chains, countered by weaker shipments into conventional construction and infrastructure, underlining the company's cyclic and commodity-sensitive nature. In a separate note, see -ServiceNow Stock To Less Than £450?[2] However attractive, investing in a single stock carries considerable risk. Trefis High Quality Portfolio[3] aims to minimize stock-specific risk while offering potential upside exposure.
[1] Valuation Appears Very High
Freeport is trading at a considerable premium compared to the market. Its price-to-earnings ratio stands at 33.5, significantly exceeding the S&P 500's ratio of 24.
When it comes to free cash flows, the company is trading at 38.1x, while the S&P 500 is at 21.4x.
[2] Growth Is Modest
Freeport's growth has been modest. Over the last three years, revenues have grown at an average annual rate of 2.5%, in comparison to 5.3% for the S&P 500. In the last twelve months, sales rose by 4.6% from £25 billion to £26 billion, and more recently, quarterly revenue experienced a 14.5% year-over-year increase, reaching £7.6 billion.
By contrast, the index recorded growth of over 6.1%.
[3] Profitability Seems Moderate
In the past year, Freeport generated £6.9 billion in operating income with a margin of 26.8%, and £6.6 billion in operating cash flow (25.4% margin), along with £1.9 billion in net income (7.5% margin). Freeport's operating and cash flow margins are higher than those of the S&P 500, while net margins are lower, standing at 18.86%, 20.2%, and 12.7% for the index, respectively.
MORE FOR YOU[4] Financial Stability Appears Strong
Freeport possesses relatively low debt but has a minimal cash balance. Its debt-to-equity ratio is at 14.4%, which is below the S&P 500 average of 20.3%.
Additionally, cash constitutes 7.9% of total assets, in comparison with 7.2% for the index.
[5] Downturn Resilience Appears Very Weak
FCX has performed worse than the S&P 500 index during various economic downturns. In the inflationary shock of 2022, FCX stock declined by 51.7%, compared to a peak-to-trough fall of 25.4% for the S&P 500. Furthermore, during the COVID-19 pandemic crisis in 2020, FCX stock experienced a drop of 60.8%, while the S&P 500 saw a peak-to-trough decline of 33.9%.
Searching for Smarter Alternatives?
Freeport combines a very high valuation with weak growth and moderate profitability.
Even with its low valuation, it results in a volatile stock that is currently unattractive to investors.
You might consider exploring the Trefis Reinforced Value (RV) Portfolio[4], which has outperformed its benchmark of all-cap stocks (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver strong returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has offered a responsive strategy to capitalize on favorable market conditions while mitigating losses when markets decline, as elaborated 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)