Southern Copper (SCCO) AI Stock Analysis

• Market Cap: $67.38B
• Dividend Yield: 2.28%
• Average Volume (3M): 1.86M
• Price to Earnings (P/E): 19.7
• Beta (1Y): 1.23
• Revenue Growth: 15.54%
• EPS Growth: 39.64%
• Country: US
• Employees: 16,133
• Sector: Basic Materials
• Sector Strength: 59
• Industry: Copper
• EPS (TTM): 1.01
• Shares Outstanding: 796,182,900
• 10 Day Avg. Volume: 1,995,992
• 30 Day Avg. Volume: 1,859,177
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 6.99
• Price to Cash Flow (P/CF): 6.70
• P/FCF Ratio: 6.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $89.42
• Price Target Upside: 0.35% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

Southern Copper has strong financial performance with significant revenue growth and profitability metrics, which contribute positively to the overall score. However, technical analysis indicates a bearish trend, and the valuation suggests the stock is fairly priced. The absence of impactful earnings call data or corporate events leaves these factors unaccounted for, focusing the score on financials and technical analysis.

Positive Factors

Dividend Announcement

SCCO announced a quarterly cash dividend of $0.70/sh and a stock dividend of 0.0073 shares of common stock per share of common stock.

Growth Prospects

There is better visibility on volume growth with Tia Maria expected to support around 10% growth over the next few years.

Operational Performance

The Ilo smelter in Peru has been running at full capacity recently.

Negative Factors

Financial Performance

SCCO reported 4Q24 EBITDA of $1.5bn, below our estimates and Bloomberg consensus.

Revenue Decline

Revenues came in lower than expected due to light copper sales volume, despite in-line production.

Valuation Concerns

The valuation is considered unattractive with an EV/EBITDA ratio of 11.3x and a free cash flow yield of about 4% for 2025.

Southern Copper Business Overview & Revenue Model

Company Description

Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc and lead. It operates the Toquepala and Cuajone open-pit mines, and a smelter and refinery in Peru; and La Caridad, an open-pit copper mine, as well as a copper ore concentrator, a SX-EW plant, a smelter, refinery, and a rod plant in Mexico. The company also operates Buenavista, an open-pit copper mine, as well as two copper concentrators and two operating SX-EW plants in Mexico. In addition, it operates five underground mines that produce zinc, lead, copper, silver, and gold; a coal mine that produces coal and coke; and a zinc refinery. The company has interests in 82,134 hectares of exploration concessions in Peru; 493,533 hectares of exploration concessions in Mexico; 246,346 hectares of exploration concessions in Argentina; 29,888 hectares of exploration concessions in Chile; and 7,299 hectares of exploration concessions in Ecuador. Southern Copper Corporation was incorporated in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation operates as a subsidiary of Americas Mining Corporation.

How the Company Makes Money

Southern Copper Corporation generates revenue primarily through the sale of copper and other metals that it extracts and processes from its mining operations. The company's primary revenue stream comes from its large-scale production of copper, which is sold to a variety of customers, including industrial manufacturers, construction companies, and electronics producers. SCCO's operations benefit from economies of scale, enabling it to maintain competitive production costs. Additionally, SCCO capitalizes on the sale of byproducts such as molybdenum, zinc, and silver, which contribute significantly to its earnings. The company's strategic location of mining operations in resource-rich regions and long-term contracts with major customers and governments also play a crucial role in stabilizing and enhancing its revenue streams.

Southern Copper Financial Statement Overview

Summary

Southern Copper's financial statements reflect a robust and growing company with strong profitability and cash flow metrics. The company benefits from a favorable market environment, evidenced by revenue growth and improved margins. While the balance sheet is strong, careful attention to leverage and liabilities is advised to ensure continued financial health. Overall, Southern Copper is well-positioned for future growth in the mining industry.

Income Statement

Southern Copper shows strong financial performance with significant revenue growth of 15.6% in the latest year, driven by increasing demand in the mining sector. The company maintains robust profitability, evidenced by a high EBITDA margin of 51.3% and a net profit margin of 29.5%. The consistent improvement in these margins over the years indicates a stable and effective operational strategy. However, the gross profit margin appears inflated due to the reported gross profit equaling total revenue, which may need clarification.

Balance Sheet

The company has a healthy balance sheet with a low debt-to-equity ratio of 0.14, highlighting strong equity financing. The equity ratio of 49% reflects a well-capitalized structure, supporting financial stability. The return on equity stands at 36.8%, showcasing efficient use of shareholder funds to generate profits. However, the relatively high total liabilities to assets ratio of 50.6% suggests potential leverage risks if not managed cautiously.

Cash Flow

Southern Copper demonstrates excellent cash flow management with a significant free cash flow growth rate of 72.4% over the past year, driven by strong operating cash flows. The operating cash flow to net income ratio of 1.31 further emphasizes effective cash generation from operations. However, the free cash flow to net income ratio of 1.31 indicates room for improving efficiency in converting profits into cash.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
11.43B	9.90B	10.05B	10.93B	7.98B
	Gross Profit
5.75B	4.32B	4.60B	6.23B	3.28B
	EBIT
5.55B	4.19B	4.44B	6.07B	3.12B
	EBITDA
6.54B	5.12B	5.23B	6.86B	3.89B
	Net Income Common Stockholders
3.38B	2.43B	2.64B	3.40B	1.57B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.50B	1.75B	2.28B	3.49B	2.59B
	Total Assets
18.71B	16.73B	17.28B	18.30B	16.67B
	Total Debt
1.24B	7.03B	7.10B	7.39B	7.45B
	Net Debt
-2.02B	5.88B	5.03B	4.39B	5.27B
	Total Liabilities
9.48B	9.24B	9.13B	10.09B	9.39B
	Stockholders Equity
9.17B	7.42B	8.08B	8.15B	7.22B
Cash Flow		Free Cash Flow
4.42B	2.56B	1.85B	3.40B	2.19B
	Operating Cash Flow
4.42B	3.57B	2.80B	4.29B	2.78B
	Investing Cash Flow
-673.30M	-1.40B	-666.80M	-972.90M	-915.80M
	Financing Cash Flow
-1.65B	-3.10B	-3.01B	-2.48B	-1.56B

Southern Copper Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 89.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCCO, the sentiment is Neutral. The current price of 89.11 is above the 20-day moving average (MA) of 88.28, below the 50-day MA of 91.65, and below the 200-day MA of 98.59, indicating a neutral trend. The MACD of -1.81 indicates Negative momentum. The RSI at 50.63 is Neutral, neither overbought nor oversold. The STOCH value of 87.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SCCO.

Southern Copper Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RIO	74 Outperform	$97.72B	8.01	20.93%	6.83%	-0.81%	14.59%
FCX	74 Outperform	$47.93B	25.59	10.92%	1.82%	10.71%	1.94%
SCCO	72 Outperform	$67.38B	19.70	40.71%	2.28%	15.54%	39.64%
BHP	72 Outperform	$118.50B	10.64	26.13%	5.22%	-3.15%	54.08%
VALE	72 Outperform	$40.16B	6.89	16.72%	8.19%	-8.71%	-22.75%
NEM	66 Neutral	$61.48B	19.09	11.13%	1.81%	58.27%	―
Sector *	49 Neutral	$1.93B	-1.63	-22.26%	3.87%	0.68%	-27.45%