Freeport-McMoRan Up 11% in 6 Months: Buy, Sell or Hold the Stock?

Core Viewpoint - Freeport-McMoRan Inc. (FCX) has shown strong performance with an 11.3% increase in shares over the past six months, outperforming both the Zacks Mining - Non Ferrous industry and the S&P 500, despite facing challenges such as higher expected unit costs and weaker sales volumes for copper and gold [1][6][26] Performance Summary - FCX's shares have gained 11.3% in the last six months, compared to a 1.3% rise in the industry and a 7.3% gain in the S&P 500 [1] - The company’s peers, Southern Copper Corporation (SCCO) and BHP Group Limited (BHP), have seen smaller gains of 0.8% and 4.9%, respectively [1] Financial Health - FCX generated operating cash flows of approximately $2.2 billion in Q2 2025 and has distributed $5.2 billion to shareholders since June 30, 2021 [12] - The company ended Q2 with $4.5 billion in cash and cash equivalents, $3 billion available under its revolving credit facility, and $1.5 billion under the PT-FI credit facility [12] - FCX's net debt stands at $1.5 billion, below its targeted range of $3-$4 billion, with a long-term debt-to-capitalization ratio of around 22.9% [13] Production and Expansion Plans - FCX is focused on expanding its copper output, with significant projects underway, including a concentrator expansion at Cerro Verde in Peru, expected to add 600 million pounds of copper annually [9] - The company is also evaluating a large-scale expansion at El Abra in Chile and conducting pre-feasibility studies in Arizona for further growth opportunities [10] Sales Volume and Pricing Trends - FCX's copper sales volumes increased by approximately 9% year-over-year in Q2 to 1,016 million pounds, with gold sales reflecting a 45% year-over-year growth [20] - However, the outlook for Q3 suggests a decline in copper sales volumes to 990 million pounds, indicating a 4% year-over-year decrease [21] Cost and Margin Outlook - FCX's average unit net cash cost per pound of copper decreased to $1.13 in Q2 from $1.73 a year earlier, but is expected to rise to $1.59 in Q3 due to higher costs and lower sales volumes [18][19] - The company anticipates that tariffs could increase the cost of goods purchased in the U.S. by approximately 5%, further impacting margins [19] Earnings Estimates - The Zacks Consensus Estimate for FCX's earnings in 2025 is $1.74, indicating a year-over-year growth of 17.6%, with expected growth of 33.8% in 2026 [22] Valuation - FCX is currently trading at a forward price/earnings ratio of 19.52X, which is a slight premium to the industry average of 19.13X [23] Investment Recommendation - Despite the positives of expansion activities and strong financial health, the recent decline in copper prices and weaker sales volume outlook suggest a cautious approach, recommending to hold the stock for current investors [26]