Since Southern Copper Corporation (NYSE:SCCO) released its earnings in June 2018, analysts seem highly optimistic, as a 100% rise in profits is expected in the upcoming year, against the past 5-year average growth rate of -16%. Currently with trailing-twelve-month earnings of US$995m, we can expect this to reach US$2.0b by 2019. Below is a brief commentary around Southern Copper’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Southern Copper going to perform in the near future?
The longer term expectations from the 12 analysts of SCCO is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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.
By 2021, SCCO’s earnings should reach US$1.8b, from current levels of US$729m, resulting in an annual growth rate of 11%. This leads to an EPS of $3.07 in the final year of projections relative to the current EPS of $0.94. Growth in the bottom line seems to suggest cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 11%, this movement will result in a margin of 21% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Southern Copper, I’ve put together three key factors you should further examine:
- 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!
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 email@example.com.