Is Freeport-McMoRan Copper & Gold Inc. (FCX) a Buy After Earnings?

We can also compare Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) to Cliffs Natural Resources Inc (NYSE:CLF) and Vale SA (ADR) (NYSE:VALE), two other natural resources companies which are tied to macro demand (their betas are at least 1.5). These peers have also taken hits in the market in the last year; Cliffs is actually down over 70%. That company is actually unprofitable on a trailing basis due to writedowns, and even adjusted earnings figures have consistently been below expectations. Analyst consensus implies a forward P/E of 8, but we don’t think it’s worth watching at this time. Vale is currently trading fairly expensively in relation to recent earnings, with a trailing P/E of 17. There is a high dividend yield here as well, and the sell-side is optimistic with the stock trading at only 7 times forward earnings estimates, but it still might be best to wait for a quarter or two of results to see that the company is on target.

We haven’t been fans of Freeport-McMoRan’s acquisition, and the company appears to be struggling heading into that event as well. We are starting to wonder, however, if the market has been too harsh on the stock. If Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) can stabilize its business, and our concerns about the commodities business are reduced, it might become an attractive value play at its currently low multiples.

Disclosure: I own no shares of any stocks mentioned in this article.