Head-To-Head Review: Freeport-McMoRan (FCX) versus Fortuna Silver Mines (FSM)

Freeport-McMoRan (NYSE: FCX) and Fortuna Silver Mines (NYSE:FSM) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, profitability, valuation, risk and earnings.

Risk & Volatility

Freeport-McMoRan has a beta of 2.51, suggesting that its share price is 151% more volatile than the S&P 500. Comparatively, Fortuna Silver Mines has a beta of 0.12, suggesting that its share price is 88% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Freeport-McMoRan and Fortuna Silver Mines, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freeport-McMoRan 2 13 4 0 2.11
Fortuna Silver Mines 0 1 4 0 2.80

Freeport-McMoRan currently has a consensus price target of $15.97, suggesting a potential downside of 19.16%. Fortuna Silver Mines has a consensus price target of $7.50, suggesting a potential upside of 42.31%. Given Fortuna Silver Mines’ stronger consensus rating and higher probable upside, analysts clearly believe Fortuna Silver Mines is more favorable than Freeport-McMoRan.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freeport-McMoRan $14.83 billion 1.93 -$4.32 billion $0.72 27.43
Fortuna Silver Mines $210.30 million 4.00 $17.85 million $0.24 21.96

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

Insider & Institutional Ownership

68.1% of Freeport-McMoRan shares are held by institutional investors. Comparatively, 42.2% of Fortuna Silver Mines shares are held by institutional investors. 1.3% of Freeport-McMoRan shares are held by 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 Fortuna Silver Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freeport-McMoRan 6.20% 13.35% 3.52%
Fortuna Silver Mines 15.44% 9.15% 7.26%

Summary

Freeport-McMoRan beats Fortuna Silver Mines on 7 of the 13 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.

Fortuna Silver Mines Company Profile

Fortuna Silver Mines Inc. is a Canada-based mining company engaged in silver mining and related activities in Latin America, including exploration, extraction and processing. The Company operates the Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru and the San Jose silver and gold mine (San Jose) in southern Mexico. The Company’s segments include Corporate, Bateas and Cuzcatlan. The Company owns interest in the Caylloma mine and related mining concessions located in southern Peru. The Caylloma property is located in the Caylloma Mining District, approximately 220 kilometers north-northwest of Arequipa, Peru. The Company produces approximately 1.7 million ounces of silver and over 1,160 ounces of gold at Caylloma. The Company’s San Jose property, which covers a silver gold bearing epithermal vein system is located in the state of Oaxaca in southern Mexico. The Company produces approximately 4.9 million ounces of silver and over 38,530 ounces of gold at San Jose.

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