Is Freeport-McMoRan Bracing for a Tough Q4 After Grasberg Setbacks?

Core Insights - Freeport-McMoRan Inc. (FCX) experienced an increase in both revenue and net income in Q3, driven by higher copper and gold prices, although lower sales volumes negatively impacted results [1][3] - The company’s copper sales volumes fell approximately 6% year-over-year to 977 million pounds, primarily due to the suspension of operations at the Grasberg Block Cave mine in Indonesia following a mud rush incident [1][7] - Gold sales volumes decreased significantly, with FCX selling 336,000 ounces, down around 40% year-over-year [1] Sales Volume Outlook - For Q4, FCX anticipates minimal contribution from the Indonesia operation due to the Grasberg incident, projecting copper sales volumes of 635 million pounds, reflecting a 35% sequential and 36% year-over-year decline [2][7] - The guidance for gold sales volumes is also weak, with expectations of only 60,000 ounces, indicating substantial decreases both sequentially and year-over-year [2] Financial Implications - The decline in sales volumes is expected to strain FCX's financial performance in Q4, despite the potential for margin expansion from higher realized prices [3][7] - The Zacks Consensus Estimate for FCX's earnings suggests a year-over-year increase of 1.4% for 2025 and 28.5% for 2026, although EPS estimates have been trending lower over the past 60 days [8] Industry Comparison - Among peers, Southern Copper Corporation (SCCO) reported a 3.6% year-over-year decline in copper sales volumes, while BHP Group Limited (BHP) saw an 11% decrease in copper sales for the first quarter of fiscal 2026 [4][5] - FCX's stock has risen 8.3% year-to-date, compared to an 18.8% increase in the Zacks Mining - Non Ferrous industry [6] Valuation Metrics - FCX is currently trading at a forward 12-month earnings multiple of 21.33, which is a 5.8% premium to the industry average of 20.17 [9] - The stock carries a Zacks Rank 3 (Hold) [11]