Freeport-McMoRan Inc. (NYSE:FCX) investors will be delighted, with the company turning in some strong numbers with its latest results. Freeport-McMoRan beat earnings, with revenues hitting US$3.9b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 11%. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Freeport-McMoRan from 13 analysts is for revenues of US$17.3b in 2021 which, if met, would be a major 34% increase on its sales over the past 12 months. Freeport-McMoRan is also expected to turn profitable, with statutory earnings of US$1.49 per share. In the lead-up to this report, the analysts had been modelling revenues of US$17.4b and earnings per share (EPS) of US$1.49 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The consensus price target rose 8.1% to US$19.62despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Freeport-McMoRan’s earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Freeport-McMoRan at US$25.00 per share, while the most bearish prices it at US$16.00. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Freeport-McMoRan’s growth to accelerate, with the forecast 34% growth ranking favourably alongside historical growth of 0.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Freeport-McMoRan to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Freeport-McMoRan going out to 2024, and you can see them free on our platform here..
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 1 warning sign with Freeport-McMoRan , and understanding this should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.