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Freeport-McMoRan is slated to release its Q4 and full-year 2019 results on January 23, 2020. For FY2019, Trefis estimates that the company will report:
Revenues of $14.7 billion (vs. consensus estimate of $14.3 billion), which would be 21.4% lower than the previous year, primarily due to sharp drop in gold and copper shipmentsEPS of $0.10 (vs. consensus estimate of $0.00), much lower than $1.78 reported in 2018, due to a combination of lower revenues and expenses decreasing a lower rate than revenues weighing on net income margin
We believe that stronger-than-expected revenues and earnings for FY2019 will not lead to much movement in FCX's stock price once earnings are announced. In fact, our forecast indicates that Freeport-McMoRan's Valuation is $13 a share, which is in line with its current price of roughly $13.
Our purpose? Shining the spotlight on key assumptions + data.
You can chime in with your own informed view right here.
The sections below lay out our hypothesis and one set of expectations
Stock Price [(A / B) x C]
Total Revenue [A]
No of Shares [B]
P/S Multiple [C]
(1) Revenue is expected to be slightly above consensus estimates
Trefis estimates FCX's 2019 revenues to be $14.7 billion, roughly 2.8% above the consensus estimate of $14.3 billion
Trefis Estimate of Total Revenue
(1) Copper $9.7 Bil (66%)
(2) Gold $1.0 Bil (7%)
(3) Molybdenum $1.2 Bil (8%)
(4) Others $7.6 Bil (52%)
(5) Elimination -$4.9 Bil (-33%)
TOTAL $14.7 Bil
Consensus $14.3 Bil
Surprise $0.4 Bil
(2) EPS likely to narrowly beat consensus estimatesFCX's 2019 earnings per share (EPS) expected to be $0.10 per Trefis analysis, slightly better than the consensus estimate of $0.00 per share
EPS - 2019E
Total Revenues $14.7 Bil
- Total Expenses $14.5 Bil
Net Income $147 Mil (*)
÷ Shares Outstanding 1457 Mil
(*) - Numbers may not add up due to rounding
(3) Stock price estimate is in line with market price
Trefis forecast for FCX's 2019 revenues is slightly higher than market expectations, but the P/S multiple forecast is in line with market expectations, working out to a fair value of $13 for FCX's stock, in line with the current market price around $13
FCX's Stock Price
Revenue Per Share
Trailing P/S Multiple
Freeport-McMoRan Revenues: How Does Freeport-McMoRan Make Money?Freeport-McMoRan's Valuation: Expensive or Cheap?More Trefis Materials Data
Details about our forecast for FCX's (1) Revenues, (2) EPS, and (3) P/S Multiple follow:
What about Revenues in 2020?
On the contrary, revenue growth rate is expected to reverse from -21.4% in 2019 to 5.8% in 2020.
Our interactive dashboard analysis, Freeport-McMoRan Revenues: How Does FCX Make Money?, provides an in-depth view of the company's revenue trend and segment-wise revenue performance, along with forecast for 2019 and 2020.
(2) EPS expected to decline sharply by 94% from $1.78 in 2018 to $0.10 in 2019
A decrease in Revenues as detailed above coupled with a lower reduction in Total Expenses along with stable Share Count will drive EPS decline. Expenses are expected to remain elevated due to higher cost per ton due to sharp drop in production, along with expenses related to the Grasberg mine transition and additional spending on the Lone Star project
EPS [(A-B) / C]
Total Revenue (A)
Total Expenses (B)
No of Shares (C)
As we forecast FCX's Revenues to decline at a faster rate than Expenses in 2019 (21.4% vs. 9.5%), this will result in a decline in FCX's Net Income Margin figure from 14% in 2018 to 1% in 2019 as detailed in the chart to the right.
Net Income Margin
Total Expenses (B)
Total Revenue (A)
What about Expenses and Earnings in 2020?
With an increase in revenue, on the back of pick up in volume sold and higher price realization, margins are expected to improve to 7% in 2020.
(3) A trailing P/S multiple of 1.3x looks appropriate for FCX's stock, which is similar to the current implied P/S multiple of 1.3x
We use our full cash flow model for FCX to arrive at a P/S multiple of 1.3x for a price estimate of $13
Note: P/S Multiples are based on Share Price at the end of the year, and reported (or expected) Revenue for the full year
We have used the P/S multiple for FCX as the average consensus EPS is $0.00, with the range being from -$0.10 to $0.12. With nil or negative EPS, P/E multiple will be undefined, thus for simplicity we have P/S multiple
Freeport-McMoRan P/S Ratio
Newmont Goldcorp P/S Ratio
Barrick Gold P/S Ratio
Our Complete Set Of Analyses On Freeport-McMoRan
1. How to save your forecasts for Freeport-McMoRan:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
With your forecast saved and named, you can compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.