Why Freeport-McMoRan (FCX) Might be Well Poised for a Surge
Freeport-McMoRan (FCX) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this mining company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Freeport-McMoRan, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.11 per share, which is a change of +1200% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for Freeport-McMoRan has increased 34.62% because three estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $0.17 per share for the full year, which represents a change of +750% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Freeport-McMoRan. Over the past month, six estimates have moved higher compared to one negative revision, helping the consensus estimate increase 569.23%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Freeport-McMoRan currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for Freeport-McMoRan have attracted decent investments and pushed the stock 22.8% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.