Freeport-McMoran (NYSE: FCX) and Southern Copper Corporation (NYSE:SCCO) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitabiliy and institutional ownership.

Dividends

Southern Copper Corporation pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. Freeport-McMoran does not pay a dividend. Southern Copper Corporation pays out 40.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for Freeport-McMoran and Southern Copper Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freeport-McMoran 2 8 3 0 2.08
Southern Copper Corporation 3 2 2 0 1.86

Freeport-McMoran presently has a consensus price target of $13.35, indicating a potential upside of 16.87%. Southern Copper Corporation has a consensus price target of $32.30, indicating a potential downside of 6.21%. Given Freeport-McMoran’s stronger consensus rating and higher probable upside, analysts plainly believe Freeport-McMoran is more favorable than Southern Copper Corporation.

Institutional & Insider Ownership

69.9% of Freeport-McMoran shares are owned by institutional investors. Comparatively, 6.3% of Southern Copper Corporation shares are owned by institutional investors. 1.4% of Freeport-McMoran shares are owned by company insiders. Comparatively, 0.5% of Southern Copper Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Freeport-McMoran and Southern Copper Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freeport-McMoran 1.11% 7.97% 1.84%
Southern Copper Corporation 15.84% 15.54% 6.89%

Risk and Volatility

Freeport-McMoran has a beta of 2.55, suggesting that its share price is 155% more volatile than the S&P 500. Comparatively, Southern Copper Corporation has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Valuation & Earnings

This table compares Freeport-McMoran and Southern Copper Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Freeport-McMoran $14.93 billion 1.11 $4.24 billion $0.15 76.14
Southern Copper Corporation $5.72 billion 4.65 $2.46 billion $1.18 29.19

Freeport-McMoran has higher revenue and earnings than Southern Copper Corporation. Southern Copper Corporation is trading at a lower price-to-earnings ratio than Freeport-McMoran, indicating that it is currently the more affordable of the two stocks.

Summary

Freeport-McMoran beats Southern Copper Corporation on 10 of the 16 factors compared between the two stocks.

Freeport-McMoran Company Profile

Freeport-McMoRan Inc. (FCX) is a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company’s segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company’s segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company’s portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

Southern Copper Corporation Company Profile

Southern Copper Corporation is an integrated copper producer. It produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. Its segments include the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit. The Peruvian operations segment includes the Toquepala and Cuajone mine complexes, and the smelting and refining plants, including a metals plant industrial railroad and port facilities that service both mines. The Mexican open-pit operations segment includes the La Caridad and Buenavista mine complexes, and the smelting and refining plants, including a metals plant and a copper rod plant, and support facilities that service both mines. As of December 31, 2016, the Mexican underground mining operations segment included five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery.

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