Head-To-Head Analysis: Freeport-McMoRan (FCX) versus Cleveland-Cliffs (CLF)

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Freeport-McMoRan (NYSE: CLF) and Cleveland-Cliffs (NYSE:CLF) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Risk & Volatility

Freeport-McMoRan has a beta of 2.46, meaning that its stock price is 146% more volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.

Profitability

This table compares Freeport-McMoRan and Cleveland-Cliffs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freeport-McMoRan 14.87% 24.01% 7.50%
Cleveland-Cliffs 20.07% -76.39% 14.64%

Insider and Institutional Ownership

73.1% of Freeport-McMoRan shares are held by institutional investors. Comparatively, 70.5% of Cleveland-Cliffs shares are held by institutional investors. 1.1% of Freeport-McMoRan shares are held by insiders. Comparatively, 0.9% of Cleveland-Cliffs shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Freeport-McMoRan and Cleveland-Cliffs’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freeport-McMoRan $16.40 billion 1.23 $1.82 billion $1.17 11.94
Cleveland-Cliffs $2.33 billion 1.26 $367.00 million $0.50 19.72

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Freeport-McMoRan and Cleveland-Cliffs, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freeport-McMoRan 1 11 8 0 2.35
Cleveland-Cliffs 1 4 7 0 2.50

Freeport-McMoRan presently has a consensus target price of $18.08, suggesting a potential upside of 29.44%. Cleveland-Cliffs has a consensus target price of $10.55, suggesting a potential upside of 7.00%. Given Freeport-McMoRan’s higher probable upside, analysts clearly believe Freeport-McMoRan is more favorable than Cleveland-Cliffs.

Dividends

Freeport-McMoRan pays an annual dividend of $0.20 per share and has a dividend yield of 1.4%. Cleveland-Cliffs does not pay a dividend. Freeport-McMoRan pays out 17.1% of its earnings in the form of a dividend.

Summary

Freeport-McMoRan beats Cleveland-Cliffs on 10 of the 16 factors compared between the two stocks.

Freeport-McMoRan Company Profile

Freeport-McMoRan Inc. engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. The company primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas. Its assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Tyrone and Chino in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde and El Abra mines in South America. It also operates a portfolio of oil and gas assets comprising oil and natural gas production onshore in South Louisiana; and on the Gulf of Mexico shelf and oil production offshore California. As of December 31, 2017, the company's estimated consolidated recoverable proven and probable mineral reserves totaled 86.7 billion pounds of copper, 23.5 million ounces of gold, and 2.84 billion pounds of molybdenum, as well as estimated proved developed oil and natural gas reserves totaled 10.1 million barrels of oil equivalents. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was founded in 1987 and is headquartered in Phoenix, Arizona.

Cleveland-Cliffs Company Profile

Cleveland-Cliffs Inc. operates as an iron ore mining company in the United States. The company operates four iron ore mines in Michigan and Minnesota; and Koolyanobbing iron ore mining complex located in Western Australia. It sells its products to integrated steel companies and steel producers in the United States and the Asia Pacific. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.

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