Freeport-McMoRan (NYSE:FCX) & FAT Brands (NASDAQ:FATBB) Critical Review

FAT Brands (NASDAQ:FATBB) and Freeport-McMoRan (NYSE:FCX) are both materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Institutional and Insider Ownership

80.8% of Freeport-McMoRan shares are owned by institutional investors. 59.9% of FAT Brands shares are owned by company insiders. Comparatively, 0.7% of Freeport-McMoRan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares FAT Brands and Freeport-McMoRan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FAT Brands	-39.33%	N/A	-17.57%
Freeport-McMoRan	11.39%	10.63%	5.69%

Dividends

FAT Brands pays an annual dividend of $0.14 per share and has a dividend yield of 15.8%. Freeport-McMoRan pays an annual dividend of $0.30 per share and has a dividend yield of 0.4%. FAT Brands pays out -1.0% of its earnings in the form of a dividend. Freeport-McMoRan pays out 14.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. FAT Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and target prices for FAT Brands and Freeport-McMoRan, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FAT Brands	1	0	0	0	1.00
Freeport-McMoRan	0	4	20	1	2.88

Freeport-McMoRan has a consensus price target of $69.75, suggesting a potential downside of 1.87%. Given Freeport-McMoRan’s stronger consensus rating and higher possible upside, analysts clearly believe Freeport-McMoRan is more favorable than FAT Brands.

Risk and Volatility

FAT Brands has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Freeport-McMoRan has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500.

Earnings and Valuation

This table compares FAT Brands and Freeport-McMoRan”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FAT Brands	$574.14 million	0.03	-$189.85 million	($13.35)	-0.07
Freeport-McMoRan	$25.87 billion	3.95	$2.20 billion	$2.03	35.01

Freeport-McMoRan has higher revenue and earnings than FAT Brands. FAT Brands is trading at a lower price-to-earnings ratio than Freeport-McMoRan, indicating that it is currently the more affordable of the two stocks.

Summary

Freeport-McMoRan beats FAT Brands on 14 of the 17 factors compared between the two stocks.

About FAT Brands

FAT Brands Inc., a multi-brand restaurant franchising company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. It owns restaurant brands, including Round Table Pizza, Marble Slab Creamery, Great American Cookies, Hot Dog on a Stick, Pretzelmaker, Fazoli's, Fatburger, Johnny Rockets, Elevation Burger, Yalla Mediterranean, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouse/Bonanza Steakhouse, Native Grill & Wings, Smokey Bones, and Twin Peaks. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Holdings, LLC.

About Freeport-McMoRan

Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. It primarily explores for copper, gold, molybdenum, silver, and other metals. The company's assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Chino and Tyrone in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was incorporated in 1987 and is headquartered in Phoenix, Arizona.