Intrinsic value of Freeport-McMoran, Inc. - FCX

Previous Close

$9.42

  Intrinsic Value

$26.16

stock screener

  Rating & Target

str. buy

+178%

Previous close

$9.42

 
Intrinsic value

$26.16

 
Up/down potential

+178%

 
Rating

str. buy

We calculate the intrinsic value of FCX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  19,001
  19,438
  19,937
  20,498
  21,119
  21,801
  22,544
  23,347
  24,213
  25,143
  26,137
  27,197
  28,327
  29,527
  30,801
  32,151
  33,580
  35,090
  36,687
  38,373
  40,151
  42,027
  44,004
  46,088
  48,282
  50,592
  53,023
  55,582
  58,274
  61,105
Variable operating expenses, $m
  9,918
  10,146
  10,407
  10,700
  11,024
  11,380
  11,768
  12,187
  12,639
  13,124
  13,643
  14,197
  14,787
  15,413
  16,078
  16,783
  17,529
  18,317
  19,151
  20,031
  20,959
  21,938
  22,970
  24,058
  25,203
  26,409
  27,678
  29,014
  30,419
  31,897
Fixed operating expenses, $m
  4,338
  4,434
  4,531
  4,631
  4,733
  4,837
  4,943
  5,052
  5,163
  5,277
  5,393
  5,512
  5,633
  5,757
  5,884
  6,013
  6,145
  6,280
  6,419
  6,560
  6,704
  6,852
  7,002
  7,156
  7,314
  7,475
  7,639
  7,807
  7,979
  8,155
Total operating expenses, $m
  14,256
  14,580
  14,938
  15,331
  15,757
  16,217
  16,711
  17,239
  17,802
  18,401
  19,036
  19,709
  20,420
  21,170
  21,962
  22,796
  23,674
  24,597
  25,570
  26,591
  27,663
  28,790
  29,972
  31,214
  32,517
  33,884
  35,317
  36,821
  38,398
  40,052
Operating income, $m
  4,744
  4,857
  4,999
  5,167
  5,362
  5,584
  5,832
  6,108
  6,411
  6,741
  7,100
  7,489
  7,907
  8,357
  8,839
  9,355
  9,906
  10,493
  11,118
  11,782
  12,488
  13,237
  14,032
  14,873
  15,765
  16,708
  17,706
  18,761
  19,876
  21,054
EBITDA, $m
  6,538
  6,693
  6,881
  7,102
  7,356
  7,642
  7,961
  8,312
  8,697
  9,115
  9,568
  10,056
  10,582
  11,145
  11,747
  12,390
  13,076
  13,806
  14,581
  15,405
  16,279
  17,205
  18,186
  19,225
  20,323
  21,485
  22,712
  24,009
  25,378
  26,823
Interest expense (income), $m
  743
  869
  918
  977
  1,045
  1,121
  1,205
  1,298
  1,398
  1,507
  1,625
  1,751
  1,886
  2,029
  2,183
  2,345
  2,518
  2,701
  2,895
  3,100
  3,316
  3,545
  3,786
  4,040
  4,308
  4,591
  4,888
  5,202
  5,531
  5,878
  6,243
Earnings before tax, $m
  3,875
  3,939
  4,021
  4,122
  4,241
  4,379
  4,535
  4,709
  4,903
  5,116
  5,349
  5,603
  5,878
  6,174
  6,494
  6,837
  7,205
  7,598
  8,018
  8,466
  8,943
  9,451
  9,991
  10,565
  11,174
  11,820
  12,504
  13,230
  13,998
  14,810
Tax expense, $m
  1,046
  1,064
  1,086
  1,113
  1,145
  1,182
  1,224
  1,272
  1,324
  1,381
  1,444
  1,513
  1,587
  1,667
  1,753
  1,846
  1,945
  2,051
  2,165
  2,286
  2,415
  2,552
  2,698
  2,853
  3,017
  3,191
  3,376
  3,572
  3,779
  3,999
Net income, $m
  2,829
  2,876
  2,936
  3,009
  3,096
  3,196
  3,310
  3,438
  3,579
  3,735
  3,905
  4,090
  4,291
  4,507
  4,741
  4,991
  5,259
  5,546
  5,853
  6,180
  6,529
  6,899
  7,294
  7,712
  8,157
  8,628
  9,128
  9,658
  10,218
  10,812

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  42,130
  43,099
  44,206
  45,450
  46,828
  48,340
  49,986
  51,768
  53,688
  55,748
  57,953
  60,305
  62,809
  65,470
  68,295
  71,288
  74,456
  77,806
  81,346
  85,084
  89,027
  93,186
  97,571
  102,190
  107,055
  112,177
  117,568
  123,241
  129,210
  135,488
Adjusted assets (=assets-cash), $m
  42,130
  43,099
  44,206
  45,450
  46,828
  48,340
  49,986
  51,768
  53,688
  55,748
  57,953
  60,305
  62,809
  65,470
  68,295
  71,288
  74,456
  77,806
  81,346
  85,084
  89,027
  93,186
  97,571
  102,190
  107,055
  112,177
  117,568
  123,241
  129,210
  135,488
Revenue / Adjusted assets
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
Average production assets, $m
  26,012
  26,610
  27,294
  28,062
  28,912
  29,846
  30,862
  31,963
  33,148
  34,420
  35,781
  37,233
  38,779
  40,423
  42,166
  44,014
  45,970
  48,039
  50,224
  52,532
  54,967
  57,535
  60,242
  63,094
  66,098
  69,260
  72,589
  76,092
  79,777
  83,653
Working capital, $m
  3,249
  3,324
  3,409
  3,505
  3,611
  3,728
  3,855
  3,992
  4,140
  4,299
  4,469
  4,651
  4,844
  5,049
  5,267
  5,498
  5,742
  6,000
  6,273
  6,562
  6,866
  7,187
  7,525
  7,881
  8,256
  8,651
  9,067
  9,505
  9,965
  10,449
Total debt, $m
  11,770
  12,529
  13,398
  14,373
  15,453
  16,638
  17,929
  19,326
  20,831
  22,447
  24,175
  26,019
  27,982
  30,069
  32,283
  34,629
  37,113
  39,740
  42,515
  45,445
  48,537
  51,798
  55,235
  58,857
  62,671
  66,687
  70,913
  75,361
  80,041
  84,963
Total liabilities, $m
  33,030
  33,789
  34,658
  35,633
  36,713
  37,898
  39,189
  40,586
  42,091
  43,707
  45,435
  47,279
  49,242
  51,329
  53,543
  55,889
  58,373
  61,000
  63,775
  66,705
  69,797
  73,058
  76,495
  80,117
  83,931
  87,947
  92,173
  96,621
  101,301
  106,223
Total equity, $m
  9,100
  9,309
  9,549
  9,817
  10,115
  10,441
  10,797
  11,182
  11,597
  12,042
  12,518
  13,026
  13,567
  14,142
  14,752
  15,398
  16,082
  16,806
  17,571
  18,378
  19,230
  20,128
  21,075
  22,073
  23,124
  24,230
  25,395
  26,620
  27,909
  29,265
Total liabilities and equity, $m
  42,130
  43,098
  44,207
  45,450
  46,828
  48,339
  49,986
  51,768
  53,688
  55,749
  57,953
  60,305
  62,809
  65,471
  68,295
  71,287
  74,455
  77,806
  81,346
  85,083
  89,027
  93,186
  97,570
  102,190
  107,055
  112,177
  117,568
  123,241
  129,210
  135,488
Debt-to-equity ratio
  1.290
  1.350
  1.400
  1.460
  1.530
  1.590
  1.660
  1.730
  1.800
  1.860
  1.930
  2.000
  2.060
  2.130
  2.190
  2.250
  2.310
  2.360
  2.420
  2.470
  2.520
  2.570
  2.620
  2.670
  2.710
  2.750
  2.790
  2.830
  2.870
  2.900
Adjusted equity ratio
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,829
  2,876
  2,936
  3,009
  3,096
  3,196
  3,310
  3,438
  3,579
  3,735
  3,905
  4,090
  4,291
  4,507
  4,741
  4,991
  5,259
  5,546
  5,853
  6,180
  6,529
  6,899
  7,294
  7,712
  8,157
  8,628
  9,128
  9,658
  10,218
  10,812
Depreciation, amort., depletion, $m
  1,794
  1,835
  1,882
  1,935
  1,994
  2,058
  2,128
  2,204
  2,286
  2,374
  2,468
  2,568
  2,674
  2,788
  2,908
  3,035
  3,170
  3,313
  3,464
  3,623
  3,791
  3,968
  4,155
  4,351
  4,558
  4,777
  5,006
  5,248
  5,502
  5,769
Funds from operations, $m
  4,623
  4,711
  4,818
  4,944
  5,090
  5,255
  5,439
  5,642
  5,865
  6,109
  6,373
  6,658
  6,965
  7,295
  7,649
  8,026
  8,430
  8,860
  9,317
  9,803
  10,320
  10,867
  11,448
  12,064
  12,715
  13,405
  14,134
  14,905
  15,720
  16,581
Change in working capital, $m
  64
  75
  85
  96
  106
  117
  127
  137
  148
  159
  170
  181
  193
  205
  218
  231
  244
  258
  273
  288
  304
  321
  338
  356
  375
  395
  416
  438
  460
  484
Cash from operations, $m
  4,559
  4,636
  4,732
  4,848
  4,984
  5,138
  5,312
  5,505
  5,717
  5,950
  6,203
  6,477
  6,772
  7,090
  7,431
  7,796
  8,185
  8,601
  9,044
  9,515
  10,015
  10,547
  11,110
  11,708
  12,340
  13,010
  13,718
  14,468
  15,260
  16,097
Maintenance CAPEX, $m
  -1,759
  -1,794
  -1,835
  -1,882
  -1,935
  -1,994
  -2,058
  -2,128
  -2,204
  -2,286
  -2,374
  -2,468
  -2,568
  -2,674
  -2,788
  -2,908
  -3,035
  -3,170
  -3,313
  -3,464
  -3,623
  -3,791
  -3,968
  -4,155
  -4,351
  -4,558
  -4,777
  -5,006
  -5,248
  -5,502
New CAPEX, $m
  -510
  -598
  -684
  -768
  -851
  -933
  -1,016
  -1,100
  -1,185
  -1,272
  -1,361
  -1,452
  -1,546
  -1,643
  -1,744
  -1,848
  -1,956
  -2,069
  -2,186
  -2,308
  -2,435
  -2,568
  -2,707
  -2,852
  -3,004
  -3,163
  -3,329
  -3,503
  -3,685
  -3,876
Cash from investing activities, $m
  -2,269
  -2,392
  -2,519
  -2,650
  -2,786
  -2,927
  -3,074
  -3,228
  -3,389
  -3,558
  -3,735
  -3,920
  -4,114
  -4,317
  -4,532
  -4,756
  -4,991
  -5,239
  -5,499
  -5,772
  -6,058
  -6,359
  -6,675
  -7,007
  -7,355
  -7,721
  -8,106
  -8,509
  -8,933
  -9,378
Free cash flow, $m
  2,290
  2,244
  2,213
  2,198
  2,198
  2,211
  2,237
  2,276
  2,328
  2,392
  2,468
  2,557
  2,658
  2,772
  2,899
  3,040
  3,194
  3,362
  3,545
  3,743
  3,957
  4,188
  4,435
  4,701
  4,985
  5,289
  5,613
  5,959
  6,327
  6,719
Issuance/(repayment) of debt, $m
  629
  760
  868
  975
  1,080
  1,185
  1,291
  1,397
  1,505
  1,615
  1,728
  1,844
  1,963
  2,087
  2,214
  2,346
  2,484
  2,627
  2,775
  2,930
  3,092
  3,261
  3,437
  3,621
  3,814
  4,016
  4,227
  4,448
  4,679
  4,922
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  629
  760
  868
  975
  1,080
  1,185
  1,291
  1,397
  1,505
  1,615
  1,728
  1,844
  1,963
  2,087
  2,214
  2,346
  2,484
  2,627
  2,775
  2,930
  3,092
  3,261
  3,437
  3,621
  3,814
  4,016
  4,227
  4,448
  4,679
  4,922
Total cash flow (excl. dividends), $m
  2,919
  3,004
  3,082
  3,173
  3,278
  3,396
  3,528
  3,673
  3,833
  4,007
  4,196
  4,401
  4,621
  4,859
  5,113
  5,386
  5,678
  5,989
  6,321
  6,674
  7,049
  7,449
  7,873
  8,322
  8,799
  9,305
  9,840
  10,407
  11,006
  11,641
Retained Cash Flow (-), $m
  -190
  -209
  -239
  -269
  -298
  -327
  -356
  -385
  -415
  -445
  -476
  -508
  -541
  -575
  -610
  -646
  -684
  -724
  -765
  -807
  -852
  -898
  -947
  -998
  -1,051
  -1,106
  -1,165
  -1,225
  -1,289
  -1,356
Prev. year cash balance distribution, $m
  888
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  3,617
  2,794
  2,843
  2,905
  2,980
  3,069
  3,172
  3,288
  3,418
  3,562
  3,720
  3,893
  4,081
  4,284
  4,503
  4,740
  4,993
  5,265
  5,556
  5,866
  6,198
  6,550
  6,926
  7,325
  7,748
  8,198
  8,675
  9,181
  9,717
  10,285
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  3,461
  2,548
  2,458
  2,371
  2,284
  2,196
  2,105
  2,012
  1,915
  1,814
  1,708
  1,599
  1,486
  1,370
  1,252
  1,133
  1,015
  900
  788
  681
  580
  487
  403
  328
  262
  205
  158
  119
  87
  63
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Freeport-McMoRan Inc. (FCX) is a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company's segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company's segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company's portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

FINANCIAL RATIOS  of  Freeport-McMoran, Inc. (FCX)

Valuation Ratios
P/E Ratio -3.3
Price to Sales 0.9
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 3.7
Price to Free Cash Flow 12.5
Growth Rates
Sales Growth Rate 1.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -58.5%
Cap. Spend. - 3 Yr. Gr. Rate -13%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 244.5%
Total Debt to Equity 264.9%
Interest Coverage -4
Management Effectiveness
Return On Assets -7.9%
Ret/ On Assets - 3 Yr. Avg. -10.4%
Return On Total Capital -16.5%
Ret/ On T. Cap. - 3 Yr. Avg. -19.1%
Return On Equity -59.9%
Return On Equity - 3 Yr. Avg. -53.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 10.6%
Gross Margin - 3 Yr. Avg. 13%
EBITDA Margin -0.8%
EBITDA Margin - 3 Yr. Avg. -17.1%
Operating Margin -18.7%
Oper. Margin - 3 Yr. Avg. -37.4%
Pre-Tax Margin -23.4%
Pre-Tax Margin - 3 Yr. Avg. -41.4%
Net Profit Margin -28%
Net Profit Margin - 3 Yr. Avg. -39.4%
Effective Tax Rate -10.7%
Eff/ Tax Rate - 3 Yr. Avg. -8.3%
Payout Ratio -0.1%

FCX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCX stock intrinsic value calculation we used $18628 million for the last fiscal year's total revenue generated by Freeport-McMoran, Inc.. The default revenue input number comes from 0001 income statement of Freeport-McMoran, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FCX stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for FCX is calculated based on our internal credit rating of Freeport-McMoran, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Freeport-McMoran, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FCX stock the variable cost ratio is equal to 52.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4245 million in the base year in the intrinsic value calculation for FCX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.8% for Freeport-McMoran, Inc..

Corporate tax rate of 27% is the nominal tax rate for Freeport-McMoran, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FCX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FCX are equal to 136.9%.

Life of production assets of 14.5 years is the average useful life of capital assets used in Freeport-McMoran, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FCX is equal to 17.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9798 million for Freeport-McMoran, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1449.393 million for Freeport-McMoran, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Freeport-McMoran, Inc. at the current share price and the inputted number of shares is $13.7 billion.

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