FCX - Embedded Expectations Analysis - 2019 08 30
Freeport-McMoRan Inc. (FCX:USA) currently trades at historical lows, well below UAFRS-based (Uniform) Asset levels, with a 0.6x Uniform P/B, implying bearish expectations for the firm. Moreover, management has concerns about copper, their growth potential, and their CapEx flexibility.Specifically, management may be concerned their ability to ramp up production in the Grasberg Block Cave, and they may be exaggerating the value their data analytics will have on business decisions. Furthermore, they may be concerned about the growth potential of their copper mining operations and the sustainability of recent fundamental strength in copper. Moreover, they may lack confidence in their ability to execute on their long-term Indonesian mining plan, and may be exaggerating the level of alignment between them and Inalum. Finally, they may be concerned about the impact of macroeconomic factors on profitability, and may lack confidence in their ability to reduce capital expenditures.
Freeport-McMoRan is a holding company. Through its subsidiaries, the company is a mining company. The company operates assets with proven and probable reserves of copper, gold and molybdenum, and the company is a publicly traded copper producer. The company's portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits; and mining operations in North America and South America, including the Morenci minerals district in Arizona and the Cerro Verde operation in Peru. The company has organized its mining operations into four primary divisions: North America copper mines, South America mining, Indonesia mining and Molybdenum mines.
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