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Tickers in this Article: ABX, SLW, MT, FCX, AA
A poor earnings report from Freeport-McMoRan October 21 means other commodity-tied companies may have trouble making their income and revenue numbers this earnings season. Copper and oil have declined by more than 50% since July, and gold is slipping as well. Gold for December delivery is down about 25% since July and now sits around $720. With economic turmoil sending out shock waves, volatile markets have become the norm.

Freeport-McMoRan Copper & Gold (NYSE:FCX)
An explorer, miner and producer of both gold and copper in Indonesia, North America, South America and Africa, Freeport-McMoRan has come under pressure as commodity prices have dropped rapidly over the past two months. The company at one time had a rapidly appreciating stock as copper and gold climbed to new highs with demand in China causing shortages worldwide. But worldwide recession possibilities have caused gold prices to fall to a 52-week low of $698.50 on October 23; and copper, likewise, collapsed to $1.70 an ounce. Now Freeport-McMoRan has seen its stock fall from $91 a share at the end of August to $23 a share earlier this week.

For the fourth quarter to be announced in January, Freeport-McMoRan has had its earnings-per-share estimates decreased from $3.33 a share to only 56 cents over the past 90 days. Revenue is still expected to rise 7% on a year-over-year basis, but the stock will have trouble rebounding unless the price of gold and copper begin to rise in the near term.

Barrick Gold (NYSE:ABX)
A slight rebound in commodities is possible with the Federal Reserve lowering interest rates, causing the dollar to decline further. But long-term trends should lead to further corrections in commodity prices and company stocks like Barrick Gold. Over the past six months, Barrick Gold has fallen from near $50 a share to $22.50 a share. Analysts have lowered the company's September earnings estimate to 45 cents a share compared to estimates of 63 cents 90 days ago. (Interested in learning more about this influential component of the U.S. economy? Read The Federal Reserve: Introduction.)

Silver Wheaton (NYSE:SLW)
Along similar commodity price declines, silver made a significant correction that has caused the profitability of silver-producing companies to erode. Silver Wheaton has seen its share price fall from around $13.30 a share down to less than $3.50 a share over the past three months.

Arcelor Mittal (NYSE:MT)
JPMorgan analyst Michael F. Gambardella cut profit targets for the Steel manufacturer Arcelor Mittal at the end of last week, contributing to the stock's fall to a four-year low. The main reason for Gambardella to lower profit outlooks for Q4 was the falling prices of steel and the company's fixed costs and inability to keep current margins intact.

Alcoa (NYSE:AA)
Finally, aluminum has also come down in price along with steel and other commodities as the worldwide slowdown puts a damper on demand. Alcoa saw its price fall more than 50% in a one-month period beginning at the end of July. Alcoa is especially struggling beyond commodity prices as the company is seeing revenue decline 2% year-over-year and earnings drop 52% year-over-year from $555 million to $268 million. (Discover how to keep score on companies to increase your chances of choosing a winner in What You Need To Know About Financial Statements.)

A slight uptick in commodity prices has relieved some of the declines in commodity-based companies such as Freeport-McMoRan, Barrick Gold, Silver Wheaton, Arcelor Mittal and Alcoa. But the overall trend for commodities is down, and companies related to cooper, gold, steel, silver and aluminum should continue to see downward pressure on their earnings ability and stock prices. Continue to monitor earnings reports for weakness or strength as the Freeport-McMoRan report showed an inability to make money with margins being stressed.

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