Freeport-McMoRan Stock May Be Undervalued by Up to 45%

Freeport-McMoRan's stock price may be undervalued by up to 45% based on a discounted cash flow model, despite its recent strong performance. The company has delivered a powerful 122.3% return over the past five years.

Copper prices have hit record highs due to supply concerns and demand from AI data centers, which could support Freeport-McMoRan's cash flows. However, the P/E ratio suggests that investors are paying a premium for the copper story, with a current multiple of 37.3x compared to the estimated fair value of 26.2x.

The discounted cash flow model estimates an intrinsic value of $138 per share, implying that the stock is currently undervalued by around 44.8%. This valuation discrepancy may be due to differing views on Freeport-McMoRan's growth prospects and country-specific risks, such as those related to Indonesia.