Episode Details

Freeport-McMoRan Inc. (FCX) Q2 2026 — Freeport-McMoRan (FCX), the largest US copper producer, reported a strong Q2 2026: a record realized copper price of $6.17/lb and record gold of $4,520/oz drove revenue of $7.03B (beat ~$6.6B), adjusted EPS of $0.74 (beat $0.62; GAAP $0.68), net income of $984M (+27% YoY), and $2.0B of operating cash flow. Yet the stock fell ~3% on the print. The honest read: this was a PRICE beat, not a volume beat — revenue actually fell 7% YoY, and Freeport sold only 710M lbs of the 786M lbs of copper it produced (and just 123k of 192k gold oz) because the giant Grasberg mine in Indonesia is still ramping back from a 2025 mud-rush incident and the new Manyar smelter is starved of concentrate. Those unsold ounces are deferred, not lost — a catch-up tailwind into H2 2026/2027 as Grasberg climbs to ~65% of capacity (H2 2026), 80% (mid-2027), and full (end-2027). The under-covered kicker: as 'America's Copper Champion' supplying ~70% of US refined copper, Freeport's US pounds sell into a COMEX price carrying a fat premium to LME under the 50% Section 232 copper tariff. Balance sheet is a fortress ($4.1B cash, net debt ~$2B ex-smelter; $0.15 dividend + $110M buybacks). Our copper-price scenario grid lands fair value ~$59 on a $5.25 base case — essentially in line with the ~$63 price and below the Street's ~$72 avg target. Our call: HOLD, 3/5. Freeport-McMoRan (NYSE: FCX) is the world's largest publicly traded copper producer — huge open-pit mines in Arizona and New Mexico, Cerro Verde and El Abra in South America, and a 48.76% stake in the giant Grasberg complex in Indonesia, one of the biggest gold mines on earth. Q2 2026 looked like a blowout on the surface: a record realized copper price of $6.17/lb (up 36% YoY) and record gold of $4,520/oz drove revenue of $7.03B (beat ~$6.6B), adjusted EPS of $0.74 (crushing the $0.62 estimate; GAAP $0.68), net income of $984M (+27% YoY), and $2.0B of operating cash flow — all against a net cash cost of just $1.97/lb, a cash margin north of $4 a pound. And yet the stock fell about 3% on the day. Why? Because this was a PRICE beat, not a volume beat. Revenue actually fell 7% from a year ago, and Freeport sold only 710M lbs of the 786M lbs of copper it produced — and just 123k of the 192k gold ounces it mined — because the Grasberg block-cave mine is still ramping back after a September 2025 mud-rush incident and the new Manyar smelter is starved of concentrate. That metal isn't lost; it's deferred revenue, a catch-up tailwind as Grasberg climbs to ~65% of capacity in H2 2026, 80% by mid-2027, and near full by end-2027. The under-covered kicker almost nobody is modeling: as 'America's Copper Champion' — Morenci in Arizona is the biggest US copper mine, supplying ~70% of America's refined copper — Freeport's US pounds now sell into a COMEX price carrying a fat premium to the global LME benchmark under the 50% Section 232 copper tariff, while much of its input was exempted. The balance sheet is a fortress: $4.1B cash, net debt of only ~$2B once you strip out ring-fenced Indonesian smelter financing, a $0.15 dividend (half base, half variable), and $110M of buybacks. So how do you value a price-taker? Not on a single record quarter. We normalize the copper price and run a scenario grid: at a through-cycle $5.25 copper, normalized EBITDA is ~$12.5B, which at 8x EV/EBITDA less ~$6B net debt and ~$9B of minority interests (Grasberg + Cerro Verde) across ~1.44B shares lands near $59 a share. If copper reverts to $4, fair value is closer to $40; if the US premium holds and Grasberg fully ramps at ~$6.25 copper, the high-$70s. Our probability-weighted value is ~$58 — essentially in line with the ~$63 price and below the Street's ~$72 average target (Buy, 25 of 41 analysts), which requires record copper and gold to hold. Our call: HOLD, 3/5 — a fortress copper franchise worth owning through the cycle, but the beat was borrowed from record commodity prices, so we won't chase it here