Glincore (LSE: GLEN) shares have been down a lot recently. They are now about 35% below their all-time highs (set in early 2023). Is this a great value stock after this fall? Let’s discuss.

Cheap stocks?

At first glance, Glencore shares look pretty affordable today. They’re currently trading at a price-to-earnings (P/E) ratio of 12.6, with 2024 earnings forecasted at 39.1 cents. That P/E falls to 10.1 with next year’s earnings forecast. That’s well below the market average.

The thing is, P/E ratios often don’t mean much when it comes to commodity companies like Glencore. That’s because the earnings (the ‘E’ in the P/E) of these companies can fluctuate so much.

When commodity prices rise, profits rise. But when they fall, profits fall. The problem is that commodity prices are notoriously unpredictable.

The problem is compounded by the fact that Glencore derives a portion of its revenue and profits from trading commodities. This adds a whole fresh element of uncertainty. The company not only relies on high commodity prices to generate high revenues and profits, but also depends on successful trading. And that is not guaranteed.

So ultimately it’s very hard to say whether Glencore shares currently offer great value.

Where will the copper go?

One thing we can be certain of is that, looking forward, the price of copper (Glencore’s main commodity) is likely to have an impact on the company’s earnings and share price. So investors really need to have a mighty opinion on this commodity if they’re thinking about buying Glencore.

When I last wrote about Glencore a few months ago, everyone was excited about copper. At the time, the price was soaring on excitement about the transition to renewable energy, electric vehicles (EVs), the global expansion of data centers, and defense spending.

However, since then, the dynamics of the copper market seem to have changed significantly. For example, earlier this month Health and Safety in its annual commodity outlook said the copper market would see a slight surplus this year and an even larger one next year due to faint demand from China.

It is worth noting here that analysts from Goldman Sachs just lowered their 2025 copper price target to $10,100 a tonne, saying the expected copper rally is unlikely to materialise due to weakness in China’s housing market. Just a few months ago, they had predicted it would hit a record high of $15,000.

Australian Investment Bank Macquarie also recently softened its outlook for copper. Last month, the company said mighty supply and depressed demand had pushed the market into surplus sooner than expected. The company also said the market is expected to remain in surplus in 2025 and 2026 (prices are expected to fall to $8,000 per tonne in 2026)

Better stocks to buy?

Given the uncertainty surrounding copper, I won’t be rushing to buy Glencore shares anytime soon. They’re too unpredictable for me.

Sure, the stock could provide good returns if the copper market improves. But I would rather invest in companies that have reliable revenues and profits, and are less speculative in nature.