Intrinsic value of Freeport-McMoRan - FCX

Previous Close

$12.83

  Intrinsic Value

$1.38

stock screener

  Rating & Target

str. sell

-89%

Previous close

$12.83

 
Intrinsic value

$1.38

 
Up/down potential

-89%

 
Rating

str. sell

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 18.6

 

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, %
  39.30
  35.87
  32.78
  30.00
  27.50
  25.25
  23.23
  21.41
  19.77
  18.29
  16.96
  15.76
  14.69
  13.72
  12.85
  12.06
  11.36
  10.72
  10.15
  9.63
  9.17
  8.75
  8.38
  8.04
  7.74
  7.46
  7.22
  6.99
  6.80
  6.62
Revenue, $m
  22,849
  31,045
  41,223
  53,592
  68,332
  85,588
  105,469
  128,046
  153,354
  181,400
  212,165
  245,610
  281,683
  320,326
  361,478
  405,080
  451,080
  499,437
  550,121
  603,116
  658,423
  716,055
  776,044
  838,438
  903,300
  970,707
  1,040,755
  1,113,551
  1,189,218
  1,267,891
Variable operating expenses, $m
  27,145
  36,882
  48,973
  63,667
  81,178
  101,679
  125,297
  152,118
  182,184
  215,503
  252,052
  291,784
  334,640
  380,548
  429,436
  481,235
  535,883
  593,331
  653,544
  716,502
  782,206
  850,673
  921,941
  996,064
  1,073,120
  1,153,200
  1,236,417
  1,322,899
  1,412,791
  1,506,255
Fixed operating expenses, $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 operating expenses, $m
  27,145
  36,882
  48,973
  63,667
  81,178
  101,679
  125,297
  152,118
  182,184
  215,503
  252,052
  291,784
  334,640
  380,548
  429,436
  481,235
  535,883
  593,331
  653,544
  716,502
  782,206
  850,673
  921,941
  996,064
  1,073,120
  1,153,200
  1,236,417
  1,322,899
  1,412,791
  1,506,255
Operating income, $m
  -4,296
  -5,837
  -7,750
  -10,075
  -12,846
  -16,091
  -19,828
  -24,073
  -28,831
  -34,103
  -39,887
  -46,175
  -52,956
  -60,221
  -67,958
  -76,155
  -84,803
  -93,894
  -103,423
  -113,386
  -123,783
  -134,618
  -145,896
  -157,626
  -169,820
  -182,493
  -195,662
  -209,348
  -223,573
  -238,364
EBITDA, $m
  -1,911
  -2,596
  -3,447
  -4,482
  -5,715
  -7,158
  -8,820
  -10,708
  -12,825
  -15,170
  -17,743
  -20,540
  -23,557
  -26,789
  -30,230
  -33,877
  -37,724
  -41,768
  -46,006
  -50,438
  -55,064
  -59,883
  -64,900
  -70,118
  -75,543
  -81,180
  -87,038
  -93,126
  -99,454
  -106,033
Interest expense (income), $m
  743
  721
  1,336
  2,119
  3,090
  4,271
  5,678
  7,325
  9,223
  11,378
  13,794
  16,471
  19,408
  22,600
  26,044
  29,732
  33,660
  37,822
  42,213
  46,829
  51,667
  56,726
  62,005
  67,507
  73,233
  79,189
  85,380
  91,815
  98,501
  105,450
  112,673
Earnings before tax, $m
  -5,017
  -7,173
  -9,869
  -13,166
  -17,117
  -21,769
  -27,153
  -33,296
  -40,208
  -47,897
  -56,358
  -65,582
  -75,557
  -86,265
  -97,690
  -109,815
  -122,625
  -136,108
  -150,252
  -165,053
  -180,510
  -196,624
  -213,403
  -230,859
  -249,009
  -267,873
  -287,477
  -307,849
  -329,023
  -351,036
Tax expense, $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
Net income, $m
  -5,017
  -7,173
  -9,869
  -13,166
  -17,117
  -21,769
  -27,153
  -33,296
  -40,208
  -47,897
  -56,358
  -65,582
  -75,557
  -86,265
  -97,690
  -109,815
  -122,625
  -136,108
  -150,252
  -165,053
  -180,510
  -196,624
  -213,403
  -230,859
  -249,009
  -267,873
  -287,477
  -307,849
  -329,023
  -351,036

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
  50,776
  68,990
  91,607
  119,093
  151,849
  190,196
  234,376
  284,546
  340,786
  403,111
  471,477
  545,800
  625,963
  711,836
  803,284
  900,177
  1,002,400
  1,109,860
  1,222,491
  1,340,259
  1,463,161
  1,591,233
  1,724,543
  1,863,196
  2,007,332
  2,157,127
  2,312,789
  2,474,558
  2,642,706
  2,817,536
Adjusted assets (=assets-cash), $m
  50,776
  68,990
  91,607
  119,093
  151,849
  190,196
  234,376
  284,546
  340,786
  403,111
  471,477
  545,800
  625,963
  711,836
  803,284
  900,177
  1,002,400
  1,109,860
  1,222,491
  1,340,259
  1,463,161
  1,591,233
  1,724,543
  1,863,196
  2,007,332
  2,157,127
  2,312,789
  2,474,558
  2,642,706
  2,817,536
Revenue / Adjusted assets
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
Average production assets, $m
  32,195
  43,743
  58,083
  75,511
  96,280
  120,594
  148,606
  180,416
  216,076
  255,593
  298,940
  346,064
  396,892
  451,340
  509,322
  570,757
  635,572
  703,707
  775,120
  849,791
  927,718
  1,008,921
  1,093,446
  1,181,359
  1,272,749
  1,367,727
  1,466,424
  1,568,993
  1,675,608
  1,786,459
Working capital, $m
  3,679
  4,998
  6,637
  8,628
  11,001
  13,780
  16,981
  20,615
  24,690
  29,205
  34,159
  39,543
  45,351
  51,573
  58,198
  65,218
  72,624
  80,409
  88,569
  97,102
  106,006
  115,285
  124,943
  134,989
  145,431
  156,284
  167,562
  179,282
  191,464
  204,131
Total debt, $m
  24,298
  38,523
  56,187
  77,654
  103,236
  133,185
  167,690
  206,872
  250,796
  299,472
  352,866
  410,912
  473,519
  540,586
  612,007
  687,680
  767,516
  851,442
  939,407
  1,031,384
  1,127,371
  1,227,395
  1,331,510
  1,439,798
  1,552,369
  1,669,358
  1,790,930
  1,917,272
  2,048,595
  2,185,138
Total liabilities, $m
  39,656
  53,881
  71,545
  93,012
  118,594
  148,543
  183,048
  222,230
  266,154
  314,830
  368,224
  426,270
  488,877
  555,944
  627,365
  703,038
  782,874
  866,800
  954,765
  1,046,742
  1,142,729
  1,242,753
  1,346,868
  1,455,156
  1,567,727
  1,684,716
  1,806,288
  1,932,630
  2,063,953
  2,200,496
Total equity, $m
  11,120
  15,109
  20,062
  26,081
  33,255
  41,653
  51,328
  62,316
  74,632
  88,281
  103,254
  119,530
  137,086
  155,892
  175,919
  197,139
  219,526
  243,059
  267,726
  293,517
  320,432
  348,480
  377,675
  408,040
  439,606
  472,411
  506,501
  541,928
  578,753
  617,040
Total liabilities and equity, $m
  50,776
  68,990
  91,607
  119,093
  151,849
  190,196
  234,376
  284,546
  340,786
  403,111
  471,478
  545,800
  625,963
  711,836
  803,284
  900,177
  1,002,400
  1,109,859
  1,222,491
  1,340,259
  1,463,161
  1,591,233
  1,724,543
  1,863,196
  2,007,333
  2,157,127
  2,312,789
  2,474,558
  2,642,706
  2,817,536
Debt-to-equity ratio
  2.190
  2.550
  2.800
  2.980
  3.100
  3.200
  3.270
  3.320
  3.360
  3.390
  3.420
  3.440
  3.450
  3.470
  3.480
  3.490
  3.500
  3.500
  3.510
  3.510
  3.520
  3.520
  3.530
  3.530
  3.530
  3.530
  3.540
  3.540
  3.540
  3.540
Adjusted equity ratio
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5,017
  -7,173
  -9,869
  -13,166
  -17,117
  -21,769
  -27,153
  -33,296
  -40,208
  -47,897
  -56,358
  -65,582
  -75,557
  -86,265
  -97,690
  -109,815
  -122,625
  -136,108
  -150,252
  -165,053
  -180,510
  -196,624
  -213,403
  -230,859
  -249,009
  -267,873
  -287,477
  -307,849
  -329,023
  -351,036
Depreciation, amort., depletion, $m
  2,385
  3,240
  4,302
  5,593
  7,132
  8,933
  11,008
  13,364
  16,006
  18,933
  22,144
  25,634
  29,399
  33,433
  37,728
  42,278
  47,079
  52,126
  57,416
  62,947
  68,720
  74,735
  80,996
  87,508
  94,278
  101,313
  108,624
  116,222
  124,119
  132,330
Funds from operations, $m
  -2,632
  -3,933
  -5,566
  -7,572
  -9,986
  -12,836
  -16,146
  -19,931
  -24,203
  -28,964
  -34,214
  -39,948
  -46,157
  -52,832
  -59,963
  -67,537
  -75,546
  -83,981
  -92,836
  -102,106
  -111,790
  -121,889
  -132,407
  -143,351
  -154,731
  -166,560
  -178,853
  -191,627
  -204,904
  -218,706
Change in working capital, $m
  1,038
  1,320
  1,639
  1,991
  2,373
  2,778
  3,201
  3,635
  4,075
  4,515
  4,953
  5,385
  5,808
  6,222
  6,625
  7,020
  7,406
  7,785
  8,160
  8,532
  8,904
  9,279
  9,658
  10,045
  10,443
  10,853
  11,278
  11,720
  12,182
  12,666
Cash from operations, $m
  -3,670
  -5,252
  -7,205
  -9,564
  -12,359
  -15,614
  -19,346
  -23,566
  -28,278
  -33,480
  -39,167
  -45,333
  -51,965
  -59,054
  -66,588
  -74,557
  -82,952
  -91,767
  -100,996
  -110,638
  -120,694
  -131,168
  -142,065
  -153,397
  -165,174
  -177,413
  -190,130
  -203,347
  -217,086
  -231,372
Maintenance CAPEX, $m
  -1,712
  -2,385
  -3,240
  -4,302
  -5,593
  -7,132
  -8,933
  -11,008
  -13,364
  -16,006
  -18,933
  -22,144
  -25,634
  -29,399
  -33,433
  -37,728
  -42,278
  -47,079
  -52,126
  -57,416
  -62,947
  -68,720
  -74,735
  -80,996
  -87,508
  -94,278
  -101,313
  -108,624
  -116,222
  -124,119
New CAPEX, $m
  -9,081
  -11,548
  -14,340
  -17,428
  -20,769
  -24,314
  -28,012
  -31,810
  -35,659
  -39,517
  -43,348
  -47,124
  -50,828
  -54,448
  -57,982
  -61,435
  -64,814
  -68,135
  -71,414
  -74,671
  -77,927
  -81,204
  -84,525
  -87,913
  -91,390
  -94,978
  -98,697
  -102,570
  -106,614
  -110,851
Cash from investing activities, $m
  -10,793
  -13,933
  -17,580
  -21,730
  -26,362
  -31,446
  -36,945
  -42,818
  -49,023
  -55,523
  -62,281
  -69,268
  -76,462
  -83,847
  -91,415
  -99,163
  -107,092
  -115,214
  -123,540
  -132,087
  -140,874
  -149,924
  -159,260
  -168,909
  -178,898
  -189,256
  -200,010
  -211,194
  -222,836
  -234,970
Free cash flow, $m
  -14,464
  -19,185
  -24,785
  -31,294
  -38,721
  -47,060
  -56,291
  -66,384
  -77,301
  -89,002
  -101,448
  -114,600
  -128,427
  -142,901
  -158,003
  -173,719
  -190,045
  -206,981
  -224,536
  -242,725
  -261,568
  -281,091
  -301,325
  -322,306
  -344,072
  -366,668
  -390,141
  -414,541
  -439,922
  -466,343
Issuance/(repayment) of debt, $m
  11,181
  14,225
  17,664
  21,467
  25,582
  29,949
  34,504
  39,182
  43,924
  48,676
  53,394
  58,046
  62,608
  67,067
  71,421
  75,673
  79,836
  83,926
  87,965
  91,977
  95,987
  100,024
  104,115
  108,288
  112,571
  116,990
  121,572
  126,341
  131,324
  136,542
Issuance/(repurchase) of shares, $m
  8,160
  11,162
  14,822
  19,185
  24,291
  30,167
  36,829
  44,283
  52,525
  61,546
  71,330
  81,859
  93,112
  105,071
  117,717
  131,035
  145,012
  159,641
  174,918
  190,844
  207,425
  224,671
  242,598
  261,224
  280,575
  300,678
  321,567
  343,276
  365,847
  389,324
Cash from financing (excl. dividends), $m  
  19,341
  25,387
  32,486
  40,652
  49,873
  60,116
  71,333
  83,465
  96,449
  110,222
  124,724
  139,905
  155,720
  172,138
  189,138
  206,708
  224,848
  243,567
  262,883
  282,821
  303,412
  324,695
  346,713
  369,512
  393,146
  417,668
  443,139
  469,617
  497,171
  525,866
Total cash flow (excl. dividends), $m
  4,878
  6,201
  7,700
  9,358
  11,152
  13,056
  15,042
  17,081
  19,148
  21,220
  23,276
  25,304
  27,293
  29,237
  31,135
  32,989
  34,803
  36,587
  38,347
  40,096
  41,844
  43,604
  45,388
  47,207
  49,074
  51,000
  52,998
  55,077
  57,249
  59,524
Retained Cash Flow (-), $m
  -8,160
  -11,162
  -14,822
  -19,185
  -24,291
  -30,167
  -36,829
  -44,283
  -52,525
  -61,546
  -71,330
  -81,859
  -93,112
  -105,071
  -117,717
  -131,035
  -145,012
  -159,641
  -174,918
  -190,844
  -207,425
  -224,671
  -242,598
  -261,224
  -280,575
  -300,678
  -321,567
  -343,276
  -365,847
  -389,324
Prev. year cash balance distribution, $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 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
  -3,282
  -4,961
  -7,122
  -9,827
  -13,139
  -17,111
  -21,787
  -27,202
  -33,377
  -40,327
  -48,054
  -56,555
  -65,819
  -75,834
  -86,582
  -98,046
  -110,209
  -123,055
  -136,571
  -150,748
  -165,581
  -181,067
  -197,210
  -214,018
  -231,501
  -249,678
  -268,569
  -288,199
  -308,598
  -329,800
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  -3,129
  -4,487
  -6,082
  -7,881
  -9,838
  -11,890
  -13,959
  -15,957
  -17,793
  -19,382
  -20,648
  -21,530
  -21,988
  -22,006
  -21,589
  -20,766
  -19,587
  -18,115
  -16,426
  -14,599
  -12,714
  -10,845
  -9,056
  -7,398
  -5,910
  -4,612
  -3,514
  -2,611
  -1,890
  -1,332
Current shareholders' claim on cash, %
  69.5
  48.6
  34.2
  24.2
  17.3
  12.5
  9.0
  6.6
  4.8
  3.6
  2.7
  2.0
  1.5
  1.1
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

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 (FCX)

Valuation Ratios
P/E Ratio -4.5
Price to Sales 1.3
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 17
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 $16403 million for the last fiscal year's total revenue generated by Freeport-McMoRan. The default revenue input number comes from 0001 income statement of Freeport-McMoRan. 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 39.3% 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 4.9%, whose default value for FCX is calculated based on our internal credit rating of Freeport-McMoRan, 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.
    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 118.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.5% for Freeport-McMoRan.

Corporate tax rate of 27% is the nominal tax rate for Freeport-McMoRan. 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 140.9%.

Life of production assets of 13.5 years is the average useful life of capital assets used in Freeport-McMoRan 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 16.1%. 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 - $7977 million for Freeport-McMoRan - 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 million for Freeport-McMoRan 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 at the current share price and the inputted number of shares is $18.6 billion.

RELATED COMPANIES Price Int.Val. Rating
RIO Rio Tinto ADR 49.53 3,965.07  str.buy
SCCO Southern Coppe 42.14 87.12  str.buy
APC Anadarko Petro 67.63 82.49  buy
VALE Vale ADR 15.46 116.94  str.buy
BHP BHP Billiton A 48.09 178.98  str.buy
KMI Kinder Morgan 17.54 13.81  sell
PSX Phillips 66 107.21 241.16  str.buy

COMPANY NEWS

▶ The Fast Money traders look at buying opportunities now   [Oct-11-18 08:00PM  CNBC Videos]
▶ What the traders bought today: 7 trades   [06:32PM  CNBC Videos]
▶ Top 5 Copper Stocks for 2018   [Oct-10-18 07:07PM  Investopedia]
▶ Is Freeport-McMoran a Bargain at Last?   [Oct-05-18 05:57PM  GuruFocus.com]
▶ Insiders Acquire Shares of Freeport-McMoRan   [03:37PM  GuruFocus.com]
▶ Freeport-McMoRan Declares Quarterly Dividend   [Sep-27-18 03:28PM  GuruFocus.com]
▶ 5 Stocks Jeremy Grantham Keeps Buying   [Sep-24-18 01:40PM  GuruFocus.com]
▶ Yahoo Finance Live: Market Movers - Sep 12th, 2018   [Sep-12-18 06:55AM  Yahoo Finance Video]
▶ Mine for Stronger Risk-Adjusted Profits in Freeport-McMoRan   [Sep-07-18 09:03AM  InvestorPlace]
▶ Wall Street in Red Thursday Morning   [Aug-30-18 03:53PM  GuruFocus.com]
▶ Better Buy: Freeport-McMoRan Inc. vs. Hecla Mining   [Aug-21-18 09:42AM  Motley Fool]
▶ Longest bull market ever, how'd we get here?   [Aug-20-18 05:54PM  CNBC Videos]
▶ 5 Stocks Seen Plunging as Metal Prices Melt   [Aug-16-18 06:00AM  Investopedia]
▶ [$$] Indonesia mine nationalisation shakes top copper producer   [Jul-29-18 06:00AM  Financial Times]
▶ Freeport-McMoRan: 2Q Earnings Snapshot   [08:16AM  Associated Press]
▶ [$$] Freeport Earnings: What to Watch   [08:00AM  The Wall Street Journal]
▶ [$$] Rio Tinto sells Grasberg stake for $3.5bn   [07:27AM  Financial Times]
▶ The S&P 500 tests a key level   [Jul-10-18 05:00PM  CNBC Videos]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.