Buy Or Sell Freeport Stock At $45?

Core Viewpoint - Freeport-McMoRan's stock has increased by 19% year-to-date, but it is perceived as unattractive due to moderate operational performance and financial condition, despite strong copper prices and demand driven by electrification and renewable energy trends [2] Financial Performance - In Q2 2025, Freeport-McMoRan reported revenue of $6.6 billion, a 5% decrease year-over-year, with net income at $970 million, down 19%, and adjusted EBITDA at $1.8 billion, also lower than prior-year figures [3] - Free cash flow decreased to $450 million, affected by weaker pricing and high mining costs [3] - The balance sheet shows $9.5 billion in debt against $1.3 billion in cash, indicating limited flexibility during downturns [3] Valuation - Freeport is trading at a price-to-earnings ratio of 33.5, significantly higher than the S&P 500's ratio of 24, and at 38.1x free cash flows compared to the S&P 500's 21.4x [4] Growth Metrics - Over the last three years, Freeport's revenues have grown at an average annual rate of 2.5%, compared to 5.3% for the S&P 500 [5] - In the last twelve months, sales rose by 4.6% from $25 billion to $26 billion, with a recent quarterly revenue increase of 14.5% year-over-year, reaching $7.6 billion [5] Profitability - In the past year, Freeport generated $6.9 billion in operating income with a margin of 26.8%, and $6.6 billion in operating cash flow with a margin of 25.4% [6] - Net income was $1.9 billion with a margin of 7.5%, while net margins for the S&P 500 stood at 18.86% [6] Financial Stability - Freeport has a debt-to-equity ratio of 14.4%, below the S&P 500 average of 20.3%, but has a minimal cash balance, with cash constituting 7.9% of total assets [7] Downturn Resilience - Freeport has underperformed the S&P 500 during economic downturns, with a 51.7% decline during the inflationary shock of 2022 compared to a 25.4% decline for the S&P 500 [8] - During the COVID-19 pandemic in 2020, Freeport's stock dropped by 60.8%, while the S&P 500 saw a peak-to-trough decline of 33.9% [8] Investment Outlook - The combination of high valuation, weak growth, and moderate profitability makes Freeport's stock currently unattractive to investors [9]