Hey there,
Looks like Copper has taken a significant hit as of late and there are now questions as to whether we truly are in a commodity super cycle. It is why we've seen weakness in copper stocks.
Glencore (GLNCY) has held up quite well all things considered. It is trading at around 1.5x book value but has an EV/EBITDA of 28.56 and P/FCF of 21.66 which is quite expensive and more than double its historical averages of 12.40 and 8.88 respectively. That being said the company did point to impressive cash flow $7.2B at copper and zinc prices of 3.5 and 1.18 respectively and despite the drop, both are still trading well above these prices.
Furthermore, since the company guided to $16B in combined EBITDA across its segments, that gives it an EV/EBITDA of only 6x based on forward EBITDA. It also guided to $7.2B in FCF (as mentioned) and it is now trading at a price to forward FCF of 8.07. All of a sudden, it doesn't look so expensive. In fact, it looks pretty cheap. For a company like Glencore, it'll all be denpendent on commodity prices.
Yesterday China announced it was going to release national commodity reserves in a bid to calm rising prices. It will be interesting to see how this all plays out in the short term but if stockpiles are more than expected, we can see further weakness across the industry.
Mat