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Actionable news in FCX: FreePORT-MCMORAN Inc,

Freeport-McMoRan: The Company Is Proving Its Mettle

Summary

Freeport-McMoRan reported mixed Q1 results.

The copper miner made huge strides toward becoming free cash flow positive as the oil and gas division becomes less of a drag.

The stock is likely heading higher as the cash flow position turns very positive heading into 2017.

The investment theme at the lows in the stock was that Freeport-McMoRan (NYSE:FCX) was in a substantially better cash flow position than predicted by the stock price. The solid Q1 results confirm the simple path to reach positive free cash flow this year.

Source: Freeport-McMoRan presentation

The stock no longer trades near the lows after the massive rally off the bottom around $3.50 only three months ago. Now the question is whether one wants to chase the rally after the market has caught on to the better cash flow position.

Cash Flows

Q1 results were generally a mixed bag, if not downright negative. Despite beating EPS estimates, Freeport-McMoRan reported a loss and missed the revenue goal. The positive news was the progress on the cash flows.

For the quarter, the copper miner generated operating cash flows of $740 million while only spending $982 million on capital expenditures. The numbers were a complete shift from last Q1 where operating cash flows were...


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