Intrinsic value of Freeport-McMoRan - FCX

Previous Close

$16.77

  Intrinsic Value

$1.38

stock screener

  Rating & Target

str. sell

-92%

Previous close

$16.77

 
Intrinsic value

$1.38

 
Up/down potential

-92%

 
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 2017), $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 24.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  18,142
  19,963
  21,867
  23,853
  25,922
  28,075
  30,314
  32,642
  35,061
  37,575
  40,187
  42,903
  45,727
  48,664
  51,720
  54,903
  58,218
  61,672
  65,274
  69,032
  72,953
  77,048
  81,325
  85,795
  90,468
  95,355
  100,468
  105,819
  111,420
  117,285
Variable operating expenses, $m
  21,552
  23,716
  25,978
  28,337
  30,795
  33,353
  36,014
  38,779
  41,653
  44,639
  47,742
  50,969
  54,323
  57,813
  61,444
  65,224
  69,163
  73,267
  77,546
  82,010
  86,668
  91,533
  96,614
  101,925
  107,476
  113,282
  119,356
  125,712
  132,367
  139,334
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
  21,552
  23,716
  25,978
  28,337
  30,795
  33,353
  36,014
  38,779
  41,653
  44,639
  47,742
  50,969
  54,323
  57,813
  61,444
  65,224
  69,163
  73,267
  77,546
  82,010
  86,668
  91,533
  96,614
  101,925
  107,476
  113,282
  119,356
  125,712
  132,367
  139,334
Operating income, $m
  -3,411
  -3,753
  -4,111
  -4,484
  -4,873
  -5,278
  -5,699
  -6,137
  -6,591
  -7,064
  -7,555
  -8,066
  -8,597
  -9,149
  -9,723
  -10,322
  -10,945
  -11,594
  -12,272
  -12,978
  -13,715
  -14,485
  -15,289
  -16,129
  -17,008
  -17,927
  -18,888
  -19,894
  -20,947
  -22,049
EBITDA, $m
  -860
  -946
  -1,036
  -1,131
  -1,229
  -1,331
  -1,437
  -1,547
  -1,662
  -1,781
  -1,905
  -2,034
  -2,167
  -2,307
  -2,452
  -2,602
  -2,760
  -2,923
  -3,094
  -3,272
  -3,458
  -3,652
  -3,855
  -4,067
  -4,288
  -4,520
  -4,762
  -5,016
  -5,281
  -5,559
Interest expense (income), $m
  743
  721
  891
  1,070
  1,257
  1,452
  1,655
  1,867
  2,087
  2,316
  2,553
  2,800
  3,057
  3,324
  3,601
  3,890
  4,190
  4,503
  4,828
  5,168
  5,522
  5,891
  6,276
  6,679
  7,099
  7,538
  7,997
  8,477
  8,980
  9,505
  10,056
Earnings before tax, $m
  -4,132
  -4,644
  -5,181
  -5,741
  -6,325
  -6,934
  -7,566
  -8,224
  -8,907
  -9,617
  -10,355
  -11,123
  -11,920
  -12,750
  -13,613
  -14,512
  -15,448
  -16,423
  -17,439
  -18,500
  -19,606
  -20,761
  -21,968
  -23,228
  -24,546
  -25,924
  -27,365
  -28,873
  -30,452
  -32,105
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
  -4,132
  -4,644
  -5,181
  -5,741
  -6,325
  -6,934
  -7,566
  -8,224
  -8,907
  -9,617
  -10,355
  -11,123
  -11,920
  -12,750
  -13,613
  -14,512
  -15,448
  -16,423
  -17,439
  -18,500
  -19,606
  -20,761
  -21,968
  -23,228
  -24,546
  -25,924
  -27,365
  -28,873
  -30,452
  -32,105

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
  41,231
  45,371
  49,697
  54,211
  58,913
  63,807
  68,897
  74,187
  79,684
  85,397
  91,335
  97,507
  103,924
  110,600
  117,546
  124,779
  132,313
  140,164
  148,350
  156,890
  165,803
  175,109
  184,830
  194,989
  205,609
  216,716
  228,336
  240,497
  253,226
  266,556
Adjusted assets (=assets-cash), $m
  41,231
  45,371
  49,697
  54,211
  58,913
  63,807
  68,897
  74,187
  79,684
  85,397
  91,335
  97,507
  103,924
  110,600
  117,546
  124,779
  132,313
  140,164
  148,350
  156,890
  165,803
  175,109
  184,830
  194,989
  205,609
  216,716
  228,336
  240,497
  253,226
  266,556
Revenue / Adjusted assets
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
Average production assets, $m
  25,507
  28,068
  30,745
  33,537
  36,446
  39,474
  42,622
  45,895
  49,296
  52,830
  56,503
  60,321
  64,292
  68,421
  72,719
  77,193
  81,854
  86,711
  91,776
  97,059
  102,572
  108,329
  114,343
  120,628
  127,198
  134,069
  141,258
  148,781
  156,656
  164,902
Working capital, $m
  3,302
  3,633
  3,980
  4,341
  4,718
  5,110
  5,517
  5,941
  6,381
  6,839
  7,314
  7,808
  8,322
  8,857
  9,413
  9,992
  10,596
  11,224
  11,880
  12,564
  13,277
  14,023
  14,801
  15,615
  16,465
  17,355
  18,285
  19,259
  20,278
  21,346
Total debt, $m
  16,200
  19,453
  22,854
  26,402
  30,098
  33,944
  37,945
  42,103
  46,424
  50,914
  55,581
  60,432
  65,476
  70,723
  76,183
  81,868
  87,790
  93,961
  100,395
  107,108
  114,113
  121,428
  129,068
  137,053
  145,401
  154,131
  163,264
  172,823
  182,828
  193,305
Total liabilities, $m
  32,408
  35,661
  39,062
  42,610
  46,306
  50,152
  54,153
  58,311
  62,632
  67,122
  71,789
  76,640
  81,684
  86,931
  92,391
  98,076
  103,998
  110,169
  116,603
  123,316
  130,321
  137,636
  145,276
  153,261
  161,609
  170,339
  179,472
  189,031
  199,036
  209,513
Total equity, $m
  8,823
  9,709
  10,635
  11,601
  12,607
  13,655
  14,744
  15,876
  17,052
  18,275
  19,546
  20,866
  22,240
  23,668
  25,155
  26,703
  28,315
  29,995
  31,747
  33,575
  35,482
  37,473
  39,554
  41,728
  44,000
  46,377
  48,864
  51,466
  54,190
  57,043
Total liabilities and equity, $m
  41,231
  45,370
  49,697
  54,211
  58,913
  63,807
  68,897
  74,187
  79,684
  85,397
  91,335
  97,506
  103,924
  110,599
  117,546
  124,779
  132,313
  140,164
  148,350
  156,891
  165,803
  175,109
  184,830
  194,989
  205,609
  216,716
  228,336
  240,497
  253,226
  266,556
Debt-to-equity ratio
  1.840
  2.000
  2.150
  2.280
  2.390
  2.490
  2.570
  2.650
  2.720
  2.790
  2.840
  2.900
  2.940
  2.990
  3.030
  3.070
  3.100
  3.130
  3.160
  3.190
  3.220
  3.240
  3.260
  3.280
  3.300
  3.320
  3.340
  3.360
  3.370
  3.390
Adjusted equity ratio
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214
  0.214

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -4,132
  -4,644
  -5,181
  -5,741
  -6,325
  -6,934
  -7,566
  -8,224
  -8,907
  -9,617
  -10,355
  -11,123
  -11,920
  -12,750
  -13,613
  -14,512
  -15,448
  -16,423
  -17,439
  -18,500
  -19,606
  -20,761
  -21,968
  -23,228
  -24,546
  -25,924
  -27,365
  -28,873
  -30,452
  -32,105
Depreciation, amort., depletion, $m
  2,551
  2,807
  3,074
  3,354
  3,645
  3,947
  4,262
  4,589
  4,930
  5,283
  5,650
  6,032
  6,429
  6,842
  7,272
  7,719
  8,185
  8,671
  9,178
  9,706
  10,257
  10,833
  11,434
  12,063
  12,720
  13,407
  14,126
  14,878
  15,666
  16,490
Funds from operations, $m
  -1,581
  -1,837
  -2,106
  -2,388
  -2,681
  -2,986
  -3,304
  -3,634
  -3,978
  -4,334
  -4,705
  -5,091
  -5,491
  -5,908
  -6,341
  -6,792
  -7,262
  -7,752
  -8,262
  -8,794
  -9,349
  -9,928
  -10,533
  -11,165
  -11,826
  -12,517
  -13,239
  -13,995
  -14,787
  -15,615
Change in working capital, $m
  316
  331
  346
  361
  377
  392
  408
  424
  440
  457
  475
  494
  514
  535
  556
  579
  603
  629
  656
  684
  714
  745
  778
  814
  850
  889
  931
  974
  1,019
  1,067
Cash from operations, $m
  -1,898
  -2,169
  -2,453
  -2,749
  -3,057
  -3,378
  -3,711
  -4,058
  -4,418
  -4,792
  -5,181
  -5,585
  -6,005
  -6,442
  -6,898
  -7,372
  -7,866
  -8,380
  -8,917
  -9,478
  -10,063
  -10,674
  -11,312
  -11,979
  -12,677
  -13,406
  -14,170
  -14,969
  -15,806
  -16,682
Maintenance CAPEX, $m
  -2,307
  -2,551
  -2,807
  -3,074
  -3,354
  -3,645
  -3,947
  -4,262
  -4,589
  -4,930
  -5,283
  -5,650
  -6,032
  -6,429
  -6,842
  -7,272
  -7,719
  -8,185
  -8,671
  -9,178
  -9,706
  -10,257
  -10,833
  -11,434
  -12,063
  -12,720
  -13,407
  -14,126
  -14,878
  -15,666
New CAPEX, $m
  -2,439
  -2,561
  -2,677
  -2,792
  -2,909
  -3,027
  -3,148
  -3,273
  -3,401
  -3,534
  -3,673
  -3,818
  -3,970
  -4,130
  -4,298
  -4,474
  -4,661
  -4,857
  -5,064
  -5,283
  -5,514
  -5,757
  -6,014
  -6,285
  -6,570
  -6,871
  -7,189
  -7,523
  -7,875
  -8,246
Cash from investing activities, $m
  -4,746
  -5,112
  -5,484
  -5,866
  -6,263
  -6,672
  -7,095
  -7,535
  -7,990
  -8,464
  -8,956
  -9,468
  -10,002
  -10,559
  -11,140
  -11,746
  -12,380
  -13,042
  -13,735
  -14,461
  -15,220
  -16,014
  -16,847
  -17,719
  -18,633
  -19,591
  -20,596
  -21,649
  -22,753
  -23,912
Free cash flow, $m
  -6,643
  -7,280
  -7,936
  -8,616
  -9,320
  -10,050
  -10,807
  -11,593
  -12,408
  -13,256
  -14,137
  -15,053
  -16,007
  -17,001
  -18,037
  -19,118
  -20,246
  -21,423
  -22,653
  -23,938
  -25,282
  -26,688
  -28,159
  -29,698
  -31,310
  -32,997
  -34,765
  -36,618
  -38,559
  -40,594
Issuance/(repayment) of debt, $m
  3,083
  3,254
  3,401
  3,548
  3,696
  3,847
  4,000
  4,158
  4,321
  4,490
  4,667
  4,851
  5,044
  5,247
  5,460
  5,685
  5,922
  6,171
  6,434
  6,712
  7,005
  7,315
  7,641
  7,985
  8,348
  8,730
  9,133
  9,558
  10,006
  10,477
Issuance/(repurchase) of shares, $m
  4,979
  5,530
  6,107
  6,707
  7,332
  7,981
  8,655
  9,356
  10,084
  10,840
  11,626
  12,443
  13,294
  14,179
  15,100
  16,060
  17,060
  18,103
  19,191
  20,327
  21,513
  22,753
  24,048
  25,402
  26,819
  28,301
  29,852
  31,476
  33,176
  34,957
Cash from financing (excl. dividends), $m  
  8,062
  8,784
  9,508
  10,255
  11,028
  11,828
  12,655
  13,514
  14,405
  15,330
  16,293
  17,294
  18,338
  19,426
  20,560
  21,745
  22,982
  24,274
  25,625
  27,039
  28,518
  30,068
  31,689
  33,387
  35,167
  37,031
  38,985
  41,034
  43,182
  45,434
Total cash flow (excl. dividends), $m
  1,418
  1,503
  1,571
  1,639
  1,708
  1,777
  1,848
  1,921
  1,996
  2,075
  2,156
  2,241
  2,330
  2,424
  2,523
  2,626
  2,736
  2,851
  2,973
  3,101
  3,237
  3,379
  3,530
  3,689
  3,857
  4,033
  4,220
  4,416
  4,623
  4,840
Retained Cash Flow (-), $m
  -4,979
  -5,530
  -6,107
  -6,707
  -7,332
  -7,981
  -8,655
  -9,356
  -10,084
  -10,840
  -11,626
  -12,443
  -13,294
  -14,179
  -15,100
  -16,060
  -17,060
  -18,103
  -19,191
  -20,327
  -21,513
  -22,753
  -24,048
  -25,402
  -26,819
  -28,301
  -29,852
  -31,476
  -33,176
  -34,957
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
  66
  73
  80
  87
  95
  104
  112
  121
  131
  140
  150
  161
  172
  183
  195
  207
  220
  233
  247
  261
  276
  292
  308
  325
  343
  362
  381
  402
  423
  446
Cash available for distribution, $m
  -3,561
  -4,027
  -4,536
  -5,068
  -5,624
  -6,204
  -6,807
  -7,435
  -8,087
  -8,765
  -9,470
  -10,202
  -10,963
  -11,754
  -12,577
  -13,433
  -14,324
  -15,252
  -16,218
  -17,226
  -18,277
  -19,373
  -20,518
  -21,713
  -22,962
  -24,267
  -25,632
  -27,060
  -28,554
  -30,117
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  -3,391
  -3,635
  -3,861
  -4,047
  -4,187
  -4,280
  -4,323
  -4,316
  -4,258
  -4,153
  -4,002
  -3,811
  -3,585
  -3,330
  -3,052
  -2,761
  -2,462
  -2,164
  -1,873
  -1,595
  -1,336
  -1,099
  -888
  -704
  -547
  -416
  -309
  -224
  -159
  -110
Current shareholders' claim on cash, %
  83.0
  68.8
  57.0
  47.2
  39.1
  32.4
  26.8
  22.2
  18.3
  15.2
  12.5
  10.4
  8.6
  7.1
  5.9
  4.8
  4.0
  3.3
  2.7
  2.3
  1.9
  1.5
  1.3
  1.1
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3

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 -5.8
Price to Sales 1.6
Price to Book 4
Price to Tangible Book
Price to Cash Flow 6.5
Price to Free Cash Flow 22.2
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 2017 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 10.6% 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 5%, 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 0.4%.

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 140.6%.

Life of production assets of 10 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 18.2%. 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 1447 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 $24.3 billion.

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COMPANY NEWS

▶ [$$] Rio Tinto sells Grasberg stake for $3.5bn   [07:27AM  Financial Times]
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▶ 2 Stocks Poised to Plunge as Dollar Rises   [Jul-02-18 11:30AM  Investopedia]
▶ Is Freeport-McMoRan, Inc. a Buy?   [Jun-18-18 10:16AM  Motley Fool]
▶ Is Freeport-McMoRan Inc. (FCX) a Buy?   [May-29-18 09:03AM  Motley Fool]
▶ Top of the pay grade: Here are the highest-paid CEOs in Phoenix   [May-25-18 03:00AM  American City Business Journals]
▶ [$$] Rio Tinto in talks over Grasberg exit   [08:55AM  Financial Times]
▶ Stocks With Rising Relative Strength: Freeport McMoRan   [03:00AM  Investor's Business Daily]
▶ MARKETS: $80 Brent crude oil isn't phasing S&P 500 bullsyet   [May-17-18 10:15AM  Yahoo Finance Video]
▶ Top Gold Mining Stocks to Buy in 2018   [May-09-18 08:05PM  Motley Fool]
▶ Where Will Freeport-McMoran, Inc. Be in 1 Year?   [May-05-18 08:51AM  Motley Fool]
▶ Still Too Early to Buy Freeport-McMoRan Stock   [May-04-18 10:18AM  Investopedia]
▶ [$$] Indonesia Digs In to Grab Bigger Share of Resource Wealth   [May-02-18 08:58AM  The Wall Street Journal]
▶ [$$] Copper and cobalt markets at risk of supply disruptions   [Apr-30-18 01:09AM  Financial Times]
▶ [$$] Why This Big S&P Gainer Is Getting Slammed   [Apr-27-18 11:22PM  The Wall Street Journal]
▶ Jim Cramer: Time to Get Opportunistic   [07:01PM  TheStreet.com]
▶ Freeport-McMoRans stock price sees major drop after earnings   [05:39PM  American City Business Journals]
▶ Big Copper Producer Cuts Copper Sales Outlook, Misses Q1 Views   [04:05PM  Investor's Business Daily]
▶ Small Caps Stay Positive, But Major Indexes Retreat   [12:11PM  Investor's Business Daily]
▶ "Fast Money" final trades: SMH, FCX and more   [Apr-18-18 05:59PM  CNBC Videos]
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