After Southern Copper Corporation's (NYSE:SCCO) earnings announcement in March 2019, analyst consensus outlook appear cautiously optimistic, as a 22% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -3.6%. Currently with trailing-twelve-month earnings of US$1.5b, we can expect this to reach US$1.9b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Southern Copper in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Southern Copper to keep growing?
Over the next three years, it seems the consensus view of the 13 analysts covering SCCO is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for SCCO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 7.6% based on the most recent earnings level of US$1.5b to the final forecast of US$2.1b by 2022. This leads to an EPS of $2.54 in the final year of projections relative to the current EPS of $2. Margins are currently sitting at 22%, which is expected to expand to 24% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Southern Copper, I've put together three fundamental aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Southern Copper worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Southern Copper is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Southern Copper? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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