Earnings Spotlight: Freeport McMoRan Copper & Gold (FCX)

Equity markets have been on a bullish streak all week as positive economic data on the home front coupled with encouraging developments overseas have helped to restore investors’ confidence. Positive momentum on Wall Street has translated into weakness for the U.S. dollar, helping commodities to inch higher across the board. With earnings season well underway, the spotlight shifts to mining giant Freeport McMoRan Copper & Gold and firm’s 2011 year-end results [see also 12 High Yielding Commodities For 2012].

Earnings In Focus

Freeport McMoRan Copper & Gold (FCX) posted its quarterly performance results on Thursday morning and the reaction from investors was quite volatile. The company reported earnings of $0.67 per share, surpassing the Thomas Reuters consensus by just two pennies [see also Gold Is Cheap, Is It A Buy?]. Traders frowned at the slightly better-than-expected results immediately; shares of FCX opened at $44.59 and sank as low as $43.31 in the first hour of trading. Nonetheless, buyers stepped in at the low levels and scooped up shares of FCX on the cheap, and relatively high trading volume propelled the stock price higher back above the $44.60 mark.

The mining behemoth raked in $640 million in net income, a modest slump compared to its net income of $1.5 billion in the fourth-quarter of 2010. Sales from mines for the year 2011 totaled to 3.7 billion pounds of copper, 1.4 million ounces of gold, and 79 million pounds of molybdenum. The firm’s projected consolidated sales from mines in 2012 is as follows: 3.8 billion pounds of copper, 1.2 million ounces of gold, and 80 million pounds molybdenum. Analysts at Deutsche Bank and JPMorgan Chase & Co. currently have “buy” and “overweight” ratings on the stock respectively, while Standpoint Research recently downgraded their rating from “buy” to “hold”.

Ways To Play

Investors looking to focus in on the metals & mining corner of the market have  a variety of instruments available at their disposal. Aside from direct investment in shares of Freeport McMoRan, some may wish to gain more direct exposure to the firm’s underlying business; seasoned traders can opt for gold and copper futures contracts [see Commodity HQ Trading Center].

Those who are looking for more indirect access to the mining sector may wish to consider a number of available exchange-traded products that maintain significant allocations to Freeport McMoRan. The State Street Materials Select Sector SPDR (XLB) is a popular offering which allocates close to 9% of its total assets to shares of the mining behemoth. Investors who wish to overweight exposure to the industrial metals corner of the mining sector ought to consider the Global X Copper Miners ETF (COPX). This ETF holds roughly 30 companies from around the globe that are actively engaged in the copper mining industry; Freeport McMoRan accounts for roughly 5% of total assets [see 13 Ways To Invest In Copper].

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Disclosure: No positions at time of writing.

 

 

 

This entry was posted in Copper, Earnings Reports, Gold, Spotlight and tagged . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

3 Responses to “Earnings Spotlight: Freeport McMoRan Copper & Gold (FCX)”

  1. [...] The tug of war between the bulls and bears continues on Wall Street as investors digested yet another plateful of mixed earnings results coupled with encouraging economic data. The Nasdaq remains at the front of the pack for the week, gaining 0.67% on the day, while the Dow Jones Industrial Average lagged behind, clinching gains of 0.36%. Euphoria across equity markets created headwinds for the U.S. dollar for a third day in a row this week, which has helped beat down commodity prices to edge higher. Gold fell victim to choppy trading on Thursday, although bearish pressures tipped the precious metal lower and futures prices settled just below $1,660 an ounce [see also Earnings Spotlight: Freeport McMoRan (FCX)]. [...]

  2. [...] The tug of war between the bulls and bears continues on Wall Street as investors digested yet another plateful of mixed earnings results coupled with encouraging economic data. The Nasdaq remains at the front of the pack for the week, gaining 0.67% on the day, while the Dow Jones Industrial Average lagged behind, clinching gains of 0.36%. Euphoria across equity markets created headwinds for the U.S. dollar for a third day in a row this week, which has helped beat down commodity prices to edge higher. Gold fell victim to choppy trading on Thursday, although bearish pressures tipped the precious metal lower and futures prices settled just below $1,660 an ounce [see also Earnings Spotlight: Freeport McMoRan (FCX)]. [...]

  3. [...] This week will watch earnings season continue in full stride as a number of bellwether firms are set to announce their most recent fiscal quarter’s statements. Last week saw some mixed results, with companies like Citigroup and Google missing, while others like Wells Fargo, IBM, and Intel were able to lift markets. In fact, the S&P 500 was able to break through the 1,300 barrier for the first time since August of last year, sparking some much needed investor confidence. Many are also happy to see the focus come off Europe for a while and keep the U.S. in headlines, especially because our last few profitable earnings seasons have been largely overshadowed by international affairs. With the coming week packed full of data, we outline three ETFs to keep an eye on as big earnings are released [see also Earnings Spotlight: Freeport McMoRan Copper & Gold (FCX)]. [...]

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