August 15, 2024
Top 10 Stock Freeport-McMoRan Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Freeport-McMoRan – Top 10 Stock in Copper Mining and Production
Freeport-McMoRan is listed as a top 10 stock on August 15, 2024 in the market index Copper because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 35 (35% performer), Obermatt assesses an overall hold recommendation for Freeport-McMoRan on August 15, 2024.
Snapshot: Obermatt Ranks
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Freeport-McMoRan Hold
| 360 METRICS | August 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 18 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 64 |
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| SENTIMENT | ||||||||
| SENTIMENT | 80 |
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| 360° VIEW | ||||||||
| 360° VIEW | 35 |
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ANALYSIS: With an Obermatt 360° View of 35 (better than 35% compared with alternatives), overall professional sentiment and financial characteristics for the stock Freeport-McMoRan are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Freeport-McMoRan. The consolidated Sentiment Rank has a good rank of 80, which means that professional investors are more optimistic about the stock than for 80% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 64 or better than 64% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 18, meaning that the share price of Freeport-McMoRan is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 25. ...read more
RECOMMENDATION: With a consolidated 360° View of 35, Freeport-McMoRan is worse than 65% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 80) and safe financing practices (Safety Rank of 64), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Freeport-McMoRaṇ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Freeport-McMoRan very positive
ANALYSIS: With an Obermatt Sentiment Rank of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Freeport-McMoRan is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Freeport-McMoRan. Analyst Opinions are at a rank of 61 (better than 61% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 83, which means that currently, professional investors hold more stock in this company than in 83% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 100 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 100% of competitors). But Analyst Opinions Change has a below-average rank of 31, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Freeport-McMoRan. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 80 (more positive than 80% compared with investment alternatives), Freeport-McMoRan has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Freeport-McMoRan Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 18 (worse than 82% compared with alternatives), Freeport-McMoRan shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Freeport-McMoRan. Price-to-Sales is 36 which means that the stock price compared with what market professionals expect for future profits is higher than 64% of comparable companies, indicating a low value concerning Freeport-McMoRan's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 9, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Freeport-McMoRan. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 28 and Dividend Yield, which is lower than 58% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 18, is a sell recommendation based on Freeport-McMoRan's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Freeport-McMoRan? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Freeport-McMoRan? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Freeport-McMoRan may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Freeport-McMoRan Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Freeport-McMoRan shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Freeport-McMoRan. Only Capital Growth has a good rank of 51, which means that currently professionals expect the company to grow its invested capital more than 34% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 44 which means that currently professionals expect the company to grow less than 56% of its competitors. Profit Growth with a rank of 34 and Stock Returns with a rank of 32 are also low (below 68% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for Freeport-McMoRan is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: Freeport-McMoRan Debt Financing Safety above-average
| SAFETY METRICS | August 15, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 34 |
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| REFINANCING | ||||||||
| REFINANCING | 60 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 67 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 64 |
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ANALYSIS: With an Obermatt Safety Rank of 64 (better than 64% compared with alternatives), the company Freeport-McMoRan has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Freeport-McMoRan is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Freeport-McMoRan. Refinancing is at 60, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 60% of its competitors. Liquidity is also good at 67, meaning the company generates more profit to service its debt than 67% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 34, which means the company has an above-average debt-to-equity ratio. It has more debt than 66% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 64 (better than 64% compared with alternatives), Freeport-McMoRan has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Freeport-McMoRan could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Freeport-McMoRan Lowest Financial Performance
| COMBINED PERFORMANCE | August 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 18 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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| COMBINED | ||||||||
| COMBINED | 13 |
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ANALYSIS: With an Obermatt Combined Rank of 13 (worse than 87% compared with investment alternatives), Freeport-McMoRan (Copper, USA) shares have lower financial characteristics compared with similar stocks. Shares of Freeport-McMoRan are low in value (priced high) with a consolidated Value Rank of 18 (worse than 82% of alternatives) and show below-average growth (Growth Rank of 25) but are safely financed (Safety Rank of 64), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 13, is a sell recommendation based on Freeport-McMoRan's financial characteristics. As the company Freeport-McMoRan's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 18) and low growth (Obermatt Growth Rank of 25), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 64) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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