Freeport-McMoRan Posts Strong Earnings Despite Indonesia Shutdown

Core Insights - Freeport-McMoRan Inc. reported resilient third-quarter earnings despite a temporary halt in operations at its Grasberg mine, impacting copper and gold output, but disciplined cost control and rising copper prices support long-term investment attractiveness [1][5][7] Financial Performance - Adjusted earnings per share (EPS) were 50 cents, exceeding expectations by 22% and showing a 31% year-over-year increase [2] - Revenue reached $6.97 billion, approximately 3.6% higher than estimates and up from $6.79 billion in the same quarter of 2024 [3] Commodity Prices - Average copper prices increased to $4.68 per pound from $4.30 per pound, driven by global electrification and renewable energy infrastructure demands [4] Production Impact - The Grasberg mine incident resulted in a decrease of about 90 million pounds in copper production and 80,000 ounces in gold production, with minimal contributions expected from Indonesian operations in Q4 [5][6] - Full-year copper sales are projected at 3.5 billion pounds [5] Operational Efficiency - Over 50% of Freeport's copper production comes from North and South America, with U.S. mines offsetting some lost output from Indonesia, reporting a 7% year-over-year sales increase [8] Financial Strength - The company ended the quarter with $4.3 billion in cash and $9.3 billion in debt, resulting in a net debt of approximately $1.7 billion, below its target range [9] - Freeport has $3 billion available for share repurchase and reaffirmed a quarterly dividend of 15 cents per share [10] Market Outlook - FCX stock is considered a strong long-term buy due to global copper demand, trading at around 24 times forward earnings, which is a discount to historical levels [11] - Analysts anticipate approximately 26% earnings growth, suggesting potential undervaluation [11] Stock Performance - FCX stock is up about 3% in early trading, nearing its 50-day simple moving average, with a consensus price target of $46.92, indicating a potential 12% increase from pre-earnings levels [12]