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Southern Copper Corporation’s (NYSE:SCCO) latest earnings update in December 2018 revealed that the business experienced a major tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key growth figures on how market analysts predict Southern Copper’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ expectations for this coming year seems buoyant, with earnings climbing by a robust 20%. However, earnings is expected to fall slightly in the following year before rising again to US$2.1b in 2022.
While it is useful to understand the growth rate each year relative to today’s level, it may be more insightful to determine the rate at which the company is moving on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Southern Copper’s earnings trajectory over time, fluctuate up and down. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 8.9%. This means that, we can presume Southern Copper will grow its earnings by 8.9% every year for the next couple of years.
For Southern Copper, there are three fundamental aspects you should further research:
- 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 SCCO 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 SCCO is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SCCO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.