Is Freeport McMoRan (FCX) Still Attractive After A 64% One Year Share Price Jump
- If you are wondering whether Freeport-McMoRan at around US$62.55 is still offering value or has already priced in the story, you are in the right place for a closer look at what you are really paying for.
- The stock has moved around recently, with a 1 year return of 64.4%, 3 year return of 56.0%, 5 year return of 76.8%, a year to date return of 20.5%, a 30 day return of 6.5%, and a 7 day return that reflects a 4.4% decline.
- Recent headlines around Freeport-McMoRan have focused on factors such as commodity market sentiment, capital allocation decisions, and how investors are thinking about long term demand for copper and other metals. This backdrop helps explain why the share price has been active over different time frames even without a single defining news event.
- On our checks, Freeport-McMoRan has a value score of 2 out of 6. This means it screens as undervalued on 2 of 6 commonly used measures. Next, we will look at how different valuation methods line up before finishing with a more complete way to think about what the stock could be worth.
Freeport-McMoRan scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Freeport-McMoRan Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model looks at the cash Freeport-McMoRan is expected to generate in the future and discounts those cash flows back to today to estimate what the whole business could be worth now.
Freeport-McMoRan’s latest twelve month free cash flow is about $678.0 million. Based on analyst inputs for the next few years, and then extrapolations beyond that, Simply Wall St’s 2 Stage Free Cash Flow to Equity model projects free cash flow reaching around $8.6 billion in 2030. The ten year path to that figure is built from a mix of analyst estimates through 2030 and then further modeled projections through 2035, all in US$ terms.
When those projected cash flows are discounted back to today, the model arrives at an estimated intrinsic value of about $85.55 per share. Against a current share price around $62.55, this implies a 26.9% discount, so on this cash flow view the shares screen as undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Freeport-McMoRan is undervalued by 26.9%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.
Approach 2: Freeport-McMoRan Price vs Earnings
For profitable companies like Freeport-McMoRan, the P/E ratio is a useful shortcut because it links what you pay today directly to the earnings the business is already generating. It gives you a quick sense of how many dollars of share price you are paying for each dollar of current earnings.
What counts as a “normal” P/E depends on how the market views a company’s growth potential and risk profile. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth expectations or higher risk usually justify a lower P/E.
Freeport-McMoRan currently trades on a P/E of 40.92x, compared with around 25.36x for the broader Metals and Mining industry and a peer group average of 26.16x. Simply Wall St’s Fair Ratio for Freeport-McMoRan is 30.83x, which is an estimate of what its P/E might be based on factors such as earnings growth, profit margin, market cap, industry and company specific risks.
This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for the company’s own characteristics rather than assuming all miners deserve the same multiple. On this view, Freeport-McMoRan’s actual P/E sits above the Fair Ratio, which suggests the shares screen as overvalued on this metric.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 22 top founder-led companies.
Upgrade Your Decision Making: Choose your Freeport-McMoRan Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce Narratives, which let you attach your own story about Freeport-McMoRan to the numbers by linking your revenue, earnings and margin expectations to a fair value that you can then compare with the current price. On Simply Wall St’s Community page, which is used by millions of investors, you can pick or create a Narrative that turns your view of the business into a clear forecast that updates automatically when new information, such as news or earnings, is added, so your fair value stays aligned with what is happening. For example, one Freeport-McMoRan Narrative on the platform anchors on a fair value around US$36.50, while another sees fair value closer to US$70.00, which shows how two investors can look at the same company, plug in different assumptions about future revenue, earnings and margins, and end up with very different views on whether the current price looks high or low.
For Freeport-McMoRan however we will make it really easy for you with previews of two leading Freeport-McMoRan Narratives:
Together they bracket a reasonable range of views on what the shares could be worth if you plug in different assumptions for growth, margins and risk.
Fair value in this bullish Narrative: US$64.02 per share
Implied pricing gap vs last close: about 2.4% below this fair value
Revenue growth assumption: 10.36% a year
- Focuses on higher copper demand, progress at Grasberg and new Indonesian smelter capacity as key supports for revenue and margin expansion.
- Builds in higher expected revenue growth and profit margins, plus a forward P/E of 22.22x, to arrive at the US$64.02 fair value.
- Flags risks around Indonesia exposure, ore grades, policy changes, environmental regulation and competition that could challenge this more optimistic path.
Fair value in this cautious Narrative: US$44.08 per share
Implied pricing gap vs last close: about 42.0% above this fair value
Revenue growth assumption: 4.0% a year
- Highlights a highly cyclical earnings profile tied to commodity prices, an unstable dividend history and past underperformance versus industry and market.
- Builds in more moderate revenue growth, lower profit margins at 11.0% and a higher forward P/E of 27.0x to support a fair value well below the current share price.
- Still acknowledges copper demand drivers such as EVs, AI and green infrastructure, along with potential U.S. critical mineral support, but treats them as insufficient to offset the risks at today’s price.
Taken together, these Narratives show you how different assumptions on copper demand, margins and required return can pull fair value for Freeport-McMoRan in very different directions, so your next step is to decide which story feels closer to how you see the business and its risks.
Do you think there's more to the story for Freeport-McMoRan? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com