Freeport-McMoran (NYSE:FCX) and BHP Billiton PLC (BBL) Financial Review

Freeport-McMoran (NYSE: FCX) and BHP Billiton PLC (NYSE:BBL) are both large-cap basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, profitabiliy, dividends, valuation, institutional ownership and earnings.

Profitability

This table compares Freeport-McMoran and BHP Billiton PLC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freeport-McMoran	5.97%	10.45%	2.60%
BHP Billiton PLC	N/A	N/A	N/A

Insider and Institutional Ownership

69.6% of Freeport-McMoran shares are owned by institutional investors. Comparatively, 4.4% of BHP Billiton PLC shares are owned by institutional investors. 1.4% of Freeport-McMoran shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Freeport-McMoran has a beta of 2.59, meaning that its share price is 159% more volatile than the S&P 500. Comparatively, BHP Billiton PLC has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Freeport-McMoran and BHP Billiton PLC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freeport-McMoran	3	9	2	0	1.93
BHP Billiton PLC	1	5	1	0	2.00

Freeport-McMoran currently has a consensus price target of $13.77, suggesting a potential downside of 4.18%. BHP Billiton PLC has a consensus price target of $32.00, suggesting a potential downside of 10.14%. Given Freeport-McMoran’s higher probable upside, analysts clearly believe Freeport-McMoran is more favorable than BHP Billiton PLC.

Earnings and Valuation

This table compares Freeport-McMoran and BHP Billiton PLC’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Freeport-McMoran	$15.31 billion	1.36	$5.13 billion	$0.71	20.24
BHP Billiton PLC	$34.69 billion	2.73	$15.48 billion	N/A	N/A

BHP Billiton PLC has higher revenue and earnings than Freeport-McMoran.

Dividends

BHP Billiton PLC pays an annual dividend of $1.08 per share and has a dividend yield of 3.0%. Freeport-McMoran does not pay a dividend.

Summary

Freeport-McMoran beats BHP Billiton PLC on 8 of the 13 factors compared between the two stocks.

About Freeport-McMoran

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.

About BHP Billiton PLC

BHP Billiton Plc is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. It extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. It manages product distribution through its global logistics chain, including freight and pipeline transportation. It sells its products through direct supply agreements with its customers and on global commodity exchanges.