Analyzing Freeport-McMoRan (FCX) and Cerro Grande Mining (CEGMF)

Freeport-McMoRan (NYSE:FCX) and Cerro Grande Mining (OTCMKTS:CEGMF) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitability, analyst recommendations, earnings and dividends.

Valuation & Earnings

This table compares Freeport-McMoRan and Cerro Grande Mining’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freeport-McMoRan $18.63 billion 0.78 $2.60 billion $1.52 6.57
Cerro Grande Mining $3.33 million 0.20 -$1.16 million N/A N/A

Freeport-McMoRan has higher revenue and earnings than Cerro Grande Mining.

Insider & Institutional Ownership

72.6% of Freeport-McMoRan shares are held by institutional investors. 1.0% of Freeport-McMoRan shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Freeport-McMoRan has a beta of 2.21, indicating that its share price is 121% more volatile than the S&P 500. Comparatively, Cerro Grande Mining has a beta of 21.77, indicating that its share price is 2,077% more volatile than the S&P 500.

Dividends

Freeport-McMoRan pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. Cerro Grande Mining does not pay a dividend. Freeport-McMoRan pays out 13.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Freeport-McMoRan and Cerro Grande Mining, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freeport-McMoRan 3 8 3 0 2.00
Cerro Grande Mining 0 0 0 0 N/A

Freeport-McMoRan currently has a consensus target price of $15.01, indicating a potential upside of 50.29%. Given Freeport-McMoRan’s higher probable upside, equities research analysts clearly believe Freeport-McMoRan is more favorable than Cerro Grande Mining.

Profitability

This table compares Freeport-McMoRan and Cerro Grande Mining’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freeport-McMoRan 9.09% 10.31% 4.05%
Cerro Grande Mining N/A N/A -155.53%

Summary

Freeport-McMoRan beats Cerro Grande Mining on 11 of the 13 factors compared between the two stocks.

Freeport-McMoRan Company Profile

Freeport-McMoRan, Inc. engages in the mining of copper, gold, and molybdenum. It operates through the following segments: North America Copper Mines; South America Mining; Indonesia Mining; Molybdenum Mines; Rod and Refining; Atlantic Copper Smelting and Refining; and Corporate, Other, and Eliminations. The North America Copper Mines segment operates open-pit copper mines in Morenci, Bagdad, Safford, Sierrita and Miami in Arizona; and Chino and Tyrone in New Mexico. The South America Mining segment includes Cerro Verde in Peru and El Abra in Chile. The Indonesia Mining segment handles the operations of Grasberg minerals district that produces copper concentrate that contains significant quantities of gold and silver. The Molybdenum Mines segment includes the Henderson underground mine and Climax open-pit mine, both in Colorado. The Rod and Refining segment consists of copper conversion facilities located in North America, and includes a refinery, rod mills, and a specialty copper products facility. The Atlantic Copper Smelting and Refining segment smelts and refines copper concentrate and markets refined copper and precious metals in slimes. The Corporate, Other, and Eliminations segment consists of other mining and eliminations, oil and gas operations, and other corporate and elimination items. The company was founded by James R. Moffett on November 10, 1987 and is headquartered in Phoenix, AZ.

Cerro Grande Mining Company Profile

Cerro Grande Mining Corporation engages in the acquisition, exploration, and development of mineral properties in Chile. The company primarily explores for gold, silver, copper, and limestone deposits. Its primary property is the Pimenton Mine that covers an area of 3,121 hectares located in the high mountain range of Chile. The company was formerly known as South American Gold and Copper Company Limited and changed its name to Cerro Grande Mining Corporation in March 2011. Cerro Grande Mining Corporation was founded in 1990 and is based in Providencia, Chile.

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