Three Questions Investors Want Answered When Freeport-McMoRan Copper & Gold Inc. (FCX) Reports

What’s the outlook for gold?
We already know last quarter was the worst quarter for gold since the start of modern gold trading. The 23% free fall in the price of gold hit gold mining stocks hard: for example, Yamana Gold Inc. (USA) (NYSE:AUY) plunged 38%. Because of that, analysts have already been reducing expectations of gold miners by ratcheting down earnings estimates. Analysts have already slashed 28% off Yamana Gold Inc. (USA) (NYSE:AUY)’s consensus bottom line, which might not be enough because the company had missed estimates in four of the past five quarters. This is where Freeport’s more diversified portfolio should really shine. This quarter alone, that diversification has helped to insulate it from the free fall in gold mining stocks — Freeport’s stock was down just over 16%.

The added diversification into oil and gas has made gold less critical to its business. That makes me wonder if the company will see the recent weakness in gold mining stocks as an opportunity to go on the offensive and add to its gold production by picking up a gold miner on the cheap. While a move deeper into gold might not be its next step, the company is always on the prowl for its next deal and any hint where its looking could provide a lift to other mining stocks.

Final Foolish thoughts
I wouldn’t expect a terrific quarter from Freeport. However, it is quite possible that the company can beat Wall Street estimates that call for revenue of $4.43 billion and earnings of $0.46 per share. The company’s diversification should have been enough to overcome the pessimism of analysts, which are projecting a really poor quarter for the company. What’s more important here is that the company has very visible growth now thanks to the addition of oil and gas, giving Freeport the potential to reward investors over the long term.

The article 3 Questions Investors Want Answered When Freeport-McMoRan Reports originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold.

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