BxCap

Freeport McMoran: With Copper Prices Rising, It's Still a Buy

First of all, the Cerre Verde strike will derail only 8% of their total copper and 5% of their total moly, so don't get too worried over it. I used their website for that calculation. As for Q2 2008, using the Conference Call Statement "Two-thirds of our copper sales are sold under industry standard contracts. What this means for us is that about half of our sales in any quarter are going to be priced at the price at the end of the quarter and not at the average price during the quarter". Price on last day was $3.86, average for quarter was around $3.70, giving us $3.78 x 930M lbs copper (Conference Call expected Q2 quantities) plus 225T x $896 Gold plus 18M lbs Moly x $34 = $4.33M revenue from metal sales. Last quarter the misc revenues were $1.4B so let's use that same number and we've got $5.73B revenues. The EPS is tricky, not due to energy costs or dollar conversions (which can be difficult to gage), no, this quarter it's tax rate. Last quarter was 33% but that was unusual. I'm going with 39% and yielding $2.54/share EPS. Right now Q3 and Q4 have $6.72B Revenue and $4.08/share EPS based on the Q1 CC quantities, but I'll update when Q2 CC is held. This stock is math, not geopolitical mumbo jumbo, lines drawn on graphs or something you heard Adami say. Financial Analysis is the long term investors friend.