Freeport-McMoran Copper & Gold Inc (FCX)

Conclusion

Freeport-McMoRan is a copper and gold miner with operations in Indonesia (Grasberg), Arizona, New Mexico, Colorado, Peru and Chile. At a price of 62.33 USD on 2026-11-09, the market capitalisation is 89.5 billion USD.

The verdict is overvalued. Today's multiples sit above their own ten-year medians: the P/E is 26.0 against a median of 24.0, EV/EBITDA is 10.3 against 6.9, and price to free cash flow is 45.3 against 24.2. The fair value band runs from 27.07 to 40.61 USD with a midpoint of 33.84 USD, a margin of safety of -45.7% at the current price. The DCF gives 24.33 USD per share at a discount rate of 11.74%, and the fair value from historical multiples is 43.35 USD. The reverse DCF implies growth of 24.0% a year, while revenue grew at 13.2% a year over five years and free cash flow per share at 1.4%.

The strongest numbers are the operating margin of 27.6%, ROIC of 17.4% against a WACC of 10.9%, and net debt to EBITDA of 0.65. The weakest are free cash flow conversion of 57.4% over the last twelve months against 81.8% over five years, the price to free cash flow premium of 86.8% over its median, and the three-year decline in earnings per share of 13.8% a year. Together, these explain why the business quality is strong while the price already assumes more than the recent record delivers.

Financial health

Financial strength is green, supported by a net debt to EBITDA of 0.65, interest coverage of 17.8 and a current ratio of 2.02. The quick ratio of 0.79 and debt to equity of 0.49 are also in a comfortable range. The Altman Z-score is 2.98, in the grey zone; the Altman model was designed for manufacturers, so it is only a rough guide for a miner. Insolvency risk: low, about 0.16% by the estimate of the Ohlson model over one to two years. The balance sheet, measured at 30 September 2026, gives the company room to absorb a downturn in copper or gold prices, although the grey Altman reading means the margin of safety is not wide.

Earnings quality

Earnings quality is green. Beneish M-score of -2.23 reads as unlikely to be manipulated, and the five-year share count change of -0.25% a year shows a modest shrinking of the share base through buybacks. Free cash flow after stock-based compensation is 1.80 billion USD over the last twelve months, and stock-based compensation is 0.67% of revenue. Free cash flow conversion is 57.4% on a trailing basis but 81.8% over five years, so the latest year converts less of earnings into cash. The Piotroski score is 5 out of 9. The company beat analyst earnings estimates in all 8 of the last quarters, with an average surprise of 23.4%. Analysts have raised current-year estimates by 8.5% over 90 days.

Profitability

Profitability is green. The operating margin of 27.6% is above its ten-year median of 25.6%, and the net margin of 13.0% is well above its median of 8.3%. The gross margin of 28.0% is close to its median of 28.2%. ROIC of 17.4% sits against a WACC of 10.9%, a given ROIC minus WACC value of 6.5%, so the business currently creates value above its cost of capital. The five-year median ROIC is 20.3%, above the current figure. Return on equity of 16.4% is partly driven by leverage: the DuPont split shows a net margin of 8.6%, an asset turnover of 0.44 and an equity multiplier of 3.08, so much of the return comes from the balance sheet rather than from asset efficiency.

Growth

Growth is green. Revenue compound growth is 3.3% over three years, 13.2% over five years and 5.6% over ten years, and revenue grew in 6 of the last 10 comparable years. Earnings per share compound at -13.8% over three years but 30.2% over five, so the recent record is weaker than the longer one. Free cash flow per share fell 12.4% a year over three years and rose 1.4% a year over five. Analysts expect earnings per share to grow 31.5% next year, which is a large step-up that depends on the continued delivery of production and prices.

Valuation

Valuation is red. The P/E of 26.0 is 8.2% above its median of 24.0, EV/EBITDA of 10.3 is 49.5% above its median of 6.9, price to free cash flow of 45.3 is 86.8% above its median of 24.2, price to sales of 3.4 is 43.8% above its median, and price to book of 4.3 is 27.0% above its median. The DCF gives 24.33 USD per share at a discount rate of 11.74%, with a terminal value making up 48.3% of its value. The fair value band runs from 27.07 to 40.61 USD, with a midpoint of 33.84 USD and a margin of safety of -45.7%. The fair value from historical multiples is 43.35 USD. The reverse DCF implies growth of 24.0% a year against the 13.2% five-year revenue growth. Dividend yield is 1.7%, with payout at 77.1% of free cash flow.

Risks

The main risk is that free cash flow conversion, now 57.4%, stays well below its five-year level of 81.8%, which would weaken the cash backing of earnings. A continued decline in earnings per share over three years, at -13.8% a year, would undercut the case that the share price is supported by current profitability. The price to free cash flow premium of 86.8% leaves little room if cash generation disappoints. The Altman Z-score of 2.98 in the grey zone means the balance sheet is sound but not clearly strong. Beta of 1.37 indicates the share price moves more than the market. The DCF depends on a terminal value that is 48.3% of its total. Not available: a debt maturity schedule and revenue by segment, so the refinancing profile and the mix between copper, gold and other metals cannot be assessed. This analysis is limited to the figures above.