Freeport-McMoRan Posts Strong Earnings Despite Indonesia Shutdown

Key Points

• Freeport-McMoRan topped estimates with adjusted EPS of 50 cents, up 22% from expectations, even as Indonesia operations paused after the Grasberg mine incident.
• Higher copper prices and operational strength in U.S. and South American mines offset lost output, keeping unit costs low and margins strong.
• With a $1.7B net debt position, ongoing dividends, and growing copper demand from electrification and data centers, FCX remains a compelling long-term buy.

Freeport-McMoRan Inc. NYSE: FCX reported third-quarter earnings on Oct. 23. The results highlighted the company’s resilient performance despite a temporary halt in operations at its Grasberg mine in Indonesia. This reduced the company’s quarterly copper and gold output. However, the company’s disciplined cost control and a rise in copper prices continue to make the miner an attractive investment based on long-term copper demand.

Adjusted earnings per share (EPS) came in at 50 cents, which was 22% higher than the 41 cents expected. The number was also 31% higher on a year-over-year (YOY) basis.

Revenue was $6.97 billion, which was about 3.6% higher than estimates for $6.73 billion and up by about the same percentage from the $6.79 billion recorded in the same quarter in 2024.

Both numbers backed up the YOY rise in copper prices, which were up on average to $4.68 per pound from $4.30 per pound. This won’t be a one-time increase. Global electrification, data center expansion, and renewable energy infrastructure will require unprecedented amounts of copper, which is bullish for basic materials stocks, and specifically miners.

The Impact of Suspending Mining Operations

The unavoidable issue that Freeport needed to address was the impact of the September mud rush incident at the Grasberg mine. The company reported that copper production was down by approximately 90 million pounds and gold production was down by about 80,000 ounces. Freeport expects minimal fourth-quarter contributions from its Indonesian mining operations. It currently projects full-year copper sales of 3.5 billion pounds.

The company didn’t provide specific timing for a restart, as the investigation is still ongoing. However, it noted that a phased restart is expected in 2026. Investors will get more information on Nov. 18. At that time, the company will hold a conference call to report on the investigation of the mining incident. Freeport will also present FCX’s multi-year operational and financial outlook.

Despite these near-term disruptions, Freeport-McMoRan's long-term outlook is bullish. Chief executive officer (CEO) Kathleen Quirk emphasized the company’s key role as a “reliable and responsible” metals supplier.

The Report Highlighted Freeport McMoRan’s Operational Efficiency

The Grasberg mine shutdown rightfully generated attention. However, investors should understand that over 50% of Freeport’s copper production comes from its operations in North and South America.

The company reported that its U.S. mines offset some of the lost output in Indonesia, with sales up 7% YOY. Freeport also reported that its new autonomous haulage technology at its Bagdad mine in Colorado helped cut its per-pound costs.

Freeport Continues to Show Financial Strength

Digging into the details of the report shows the company’s underlying strength. The company ended the quarter with $4.3 billion in cash and $9.3 billion in debt. That puts its net debt at around $1.7 billion, which is below its target range between $3 billion and $4 billion.

Although the company did not buy back any shares in the quarter, it does have $3 billion available under its previously announced share repurchase program. Freeport reaffirmed its quarterly dividend of 15 cents per share.

FCX Stock is a Strong Long-Term Buy

FCX stock is attractively valued as a long-term investment due to the global demand for copper. At around 24x forward earnings, the stock is trading at a discount to its historic levels. Plus, analysts were anticipating approximately 26% earnings growth before the report, which suggests the stock could be undervalued.

The question is by how much? FCX is up about 3% in early trading, which puts it within striking distance of its 50-day simple moving average (SMA). If it breaks above that, it could make a run at its consensus price target of $46.92.

That’s a 12% increase from the stock’s price heading into earnings. That would align with the stock's highs in July and again in September but would still leave it shy of its 52-week high of $48.21, set in November 2024. To start approaching that, more volume will be required.