Entering the financial ring, we weigh Altria stock (NYSE: MO) against its formidable opponent Freeport-McMoRan stock (NYSE: FCX). Though from distinct sectors, these contenders find themselves evenly matched with market capitalizations around $75-$80 billion and revenue bases of $20-23 billion. While Freeport-McMoRan boasts recent revenue growth, Altria shines in profitability. Despite both stocks sporting a valuation multiple of 3.3 times revenues, our analysis projects Altria to outshine Freeport-McMoRan over the coming three years.

The Tale of Stock Performance

Altria’s stock journey saw a 15% surge from $40 to about $45 in early 2021 till now, paling in comparison to Freeport-McMoRan’s staggering 100% leap from $25 to around $50 over the same period. Unpredictable are the winds of the market; MO’s returns oscillated between 16%, -4%, and -12% in 2021, 2022, and 2023, while FCX witnessed 60%, -9%, and 12% figures, respectively. Beating the S&P 500 consistently eludes most stocks, including titans like WMT, PG, and GOOG. Countering uncertainty, can Altria rise above Freeport-McMoRan’s fortune in the upcoming tryst?

Revenue Growth Showdown

Freeport-McMoRan flaunts a solid 20.3% annual revenue growth over the past three years, contrasting Altria’s -2.2% figure. Supply snags during the pandemic slowed Altria’s tobacco sales momentum, while Freeport-McMoRan thrived on escalating copper and gold prices. A sight to behold is Freeport-McMoRan’s 0.3% sales growth in the last twelve months trumping Altria’s -2.3% dip.

Profitability and Financial Fortitude

Altria’s operating margin surged from 52.1% in 2020 to 56% in 2023, outstripping Freeport-McMoRan’s growth from 13.8% to 27.2% during the same period. Analyzing the financial scaffolding, Altria’s 32% debt-to-equity ratio overshadows Freeport-McMoRan’s 6%, yet its 10% cash stakes a minor lead over the latter. To shift the odds, we anticipate Altria to deliver a more fruitful future compared to Freeport-McMoRan.

The Verdict: Looking Ahead

Freeport-McMoRan’s growth spurt and debt handling shine brightly, while Altria’s profitability and cash reserves twinkle in the distance. Grounded on the P/S foundation, we foresee Altria surpassing Freeport-McMoRan’s performance over the ensuing three years. In contrast to historical averages, Altria trades at 3.3 times sales versus a five-year average of 3.1 times, while Freeport-McMoRan mirrors at 3.3 times revenues compared to the 2.3 times five-year average.

While Altria may emerge as the champion against Freeport-McMoRan in the imminent duel, understanding how Altria’s peers fare on pivotal metrics can unravel valuable insights. The arena of Peer Comparisons stands as a compass for investors seeking clarity amidst the market’s murky waters.

[1] Returns as of 5/31/2024 [2] Cumulative total returns since the end of 2016

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