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Freeport (FCX) to Post Q2 Earnings: What's in the Offing?
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Freeport-McMoRan Inc. (FCX - Free Report) is set to release second-quarter 2018 results before the opening bell on Jul 25.
In the last reported quarter, the mining company delivered a negative earnings surprise of 20.7% by posting adjusted earnings of 46 cents per share, which trailed the Zacks Consensus Estimate of 58 cents.
Revenues went up around 45.7% year over year to $4,868 million. The figure surpassed the Zacks Consensus Estimate of $4,759.9 million.
Notably, Freeport beat the Zacks Consensus Estimate in two of the trailing four quarters while missed in the other two, with an average negative surprise of 3.6%.
Will the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
During first-quarter earnings call, the company projected consolidated sales volumes for 2018 to be roughly 3.8 billion pounds of copper, 2.4 million ounces of gold and 95 million pounds of molybdenum. This included 970 million pounds of copper, 700,000 ounces of gold and 24 million pounds of molybdenum for second-quarter 2018.
The Zacks Consensus Estimate for consolidated revenues is $4,821 million, reflecting a year-over-year decline of around 29.9%. Consolidated copper production for the second quarter is expected to rise 1.5% from the last reported quarter as the Zacks Consensus Estimate is pegged at 966 million pounds.
Total copper sales from Freeport’s North American Copper Mines are projected to witness a 3.9% decline sequentially as the Zacks Consensus Estimate for the second quarter is pegged at 369 million pounds. The segment’s sales volume also fell in the first quarter mainly due to timing of shipments.
Meanwhile, total copper sales from the company’s South American Mining are expected to witness a 2.6% increase from the last reported quarter as the Zacks Consensus Estimate is currently pegged at 307 million pounds.
Copper sales from Indonesia Mining are expected to fall around 9.4% on a sequential basis as the Zacks Consensus Estimate is currently pegged at 289 million pounds. However, gold sales from Indonesia Mining are projected to increase roughly 14.8% from the last reported quarter as the Zacks Consensus Estimate for the second quarter is pegged at 692,000 ounces.
Rising unit net cash costs for copper in Freeport’s North American operation is a concern. The company expects average unit net cash costs of copper for North America to be roughly $1.71 per pound for 2018, primarily indicating lower expected sales volumes. Unit net cash costs for the region rose 19.2% year over year to $1.74 per pound in first-quarter 2018.
Nevertheless, Freeport is likely to gain from favorable copper market conditions, focus on productivity along with cost and capital discipline.
Shares of Freeport have lost 2% in the last three months compared with the industry’s 14.7% decline.
Earnings Whispers
Our proven model does not conclusively show that Freeport is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Earnings ESP: Earnings ESP for Freeport for the second quarter is -0.25%. The Zacks Consensus Estimate for the second quarter is currently pegged at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Freeport currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Eastman Chemical Company (EMN - Free Report) has an Earnings ESP of +1.25% and holds a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +1.52% and carries a Zacks Rank #3.
Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +2.34% and carries a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Freeport (FCX) to Post Q2 Earnings: What's in the Offing?
Freeport-McMoRan Inc. (FCX - Free Report) is set to release second-quarter 2018 results before the opening bell on Jul 25.
In the last reported quarter, the mining company delivered a negative earnings surprise of 20.7% by posting adjusted earnings of 46 cents per share, which trailed the Zacks Consensus Estimate of 58 cents.
Revenues went up around 45.7% year over year to $4,868 million. The figure surpassed the Zacks Consensus Estimate of $4,759.9 million.
Notably, Freeport beat the Zacks Consensus Estimate in two of the trailing four quarters while missed in the other two, with an average negative surprise of 3.6%.
Will the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Freeport-McMoRan Inc. Price and EPS Surprise
Freeport-McMoRan Inc. Price and EPS Surprise | Freeport-McMoRan Inc. Quote
Factors at Play
During first-quarter earnings call, the company projected consolidated sales volumes for 2018 to be roughly 3.8 billion pounds of copper, 2.4 million ounces of gold and 95 million pounds of molybdenum. This included 970 million pounds of copper, 700,000 ounces of gold and 24 million pounds of molybdenum for second-quarter 2018.
The Zacks Consensus Estimate for consolidated revenues is $4,821 million, reflecting a year-over-year decline of around 29.9%. Consolidated copper production for the second quarter is expected to rise 1.5% from the last reported quarter as the Zacks Consensus Estimate is pegged at 966 million pounds.
Total copper sales from Freeport’s North American Copper Mines are projected to witness a 3.9% decline sequentially as the Zacks Consensus Estimate for the second quarter is pegged at 369 million pounds. The segment’s sales volume also fell in the first quarter mainly due to timing of shipments.
Meanwhile, total copper sales from the company’s South American Mining are expected to witness a 2.6% increase from the last reported quarter as the Zacks Consensus Estimate is currently pegged at 307 million pounds.
Copper sales from Indonesia Mining are expected to fall around 9.4% on a sequential basis as the Zacks Consensus Estimate is currently pegged at 289 million pounds. However, gold sales from Indonesia Mining are projected to increase roughly 14.8% from the last reported quarter as the Zacks Consensus Estimate for the second quarter is pegged at 692,000 ounces.
Rising unit net cash costs for copper in Freeport’s North American operation is a concern. The company expects average unit net cash costs of copper for North America to be roughly $1.71 per pound for 2018, primarily indicating lower expected sales volumes. Unit net cash costs for the region rose 19.2% year over year to $1.74 per pound in first-quarter 2018.
Nevertheless, Freeport is likely to gain from favorable copper market conditions, focus on productivity along with cost and capital discipline.
Shares of Freeport have lost 2% in the last three months compared with the industry’s 14.7% decline.
Earnings Whispers
Our proven model does not conclusively show that Freeport is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:
Earnings ESP: Earnings ESP for Freeport for the second quarter is -0.25%. The Zacks Consensus Estimate for the second quarter is currently pegged at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Freeport currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Eastman Chemical Company (EMN - Free Report) has an Earnings ESP of +1.25% and holds a Zacks Rank #2.
Ingevity Corporation (NGVT - Free Report) has an Earnings ESP of +1.52% and carries a Zacks Rank #3.
Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +2.34% and carries a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>