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Copper Hits Record High, Boosting Miner Stocks
6 Sep
Summary
- Copper prices recently reached an all-time record high.
- Freeport-McMoRan's stock has benefited from rising copper.
- Attractive valuation multiples are noted for FCX stock.
Copper has reached unprecedented price levels, positively impacting copper miner Freeport-McMoRan (FCX). This surge supports the stock's attractiveness, even for those with a neutral outlook on future copper prices.
Management provides earnings and cash flow sensitivity data to copper prices. For the 2027/2028 period, at the current copper price of $6.51, FCX is projected to generate approximately $18.25 billion in EBITDA and $14 billion in operating cash flow.
These figures suggest attractive valuation multiples. Based on enterprise value to EBITDA, FCX would trade at 6.8 times, lower than the decade average of 9.01x. Free cash flow multiples are also projected at a compelling 11.2 times.
The case for copper extends beyond valuation. It is bolstered by a structural shift in demand, compounded by years of underinvestment in global copper mines and a decline in ore grades.
