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Southern Copper (SCCO) to Post Q1 Earnings: What's in Store?

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Southern Copper Corporation SCCO is expected to release first-quarter 2021 results, before the opening bell on Apr 26.

Q4 Results

In the last reported quarter, Southern Copper’s earnings and sales not only beat the Zacks Consensus Estimate but also improved year over year owing to higher volumes, and rising prices for copper, silver and zinc.

The company has beat earnings estimates in three of the trailing four quarters, while missing in one quarter, the average surprise being 4.3%.

Southern Copper Corporation Price and EPS Surprise

Southern Copper Corporation Price and EPS Surprise
Southern Copper Corporation Price and EPS Surprise

Southern Copper Corporation price-eps-surprise | Southern Copper Corporation Quote

Q1 Estimates

The Zacks Consensus Estimate for first-quarter 2021 earnings per share is currently pegged at 85 cents, suggesting an improvement of 204% from the prior-year quarter. The Zacks Consensus Estimate for the March-end quarter’s earnings was revised upward by 9% over the past 30 days.

What the Zacks Model Unveils

Our proven model does not predict an earnings beat for Southern Copper this time around. Notably, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Southern Copper is -7.06%.

Zacks Rank: Southern Copper currently carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Note

The company has been reporting higher copper production from its mines, particularly at the Cuajone mine on account of higher ore grades and recoveries, and La Caridad and the IMMSA mines. However, lower production at the Toquepala mine and the Buenavista mine due to lower ore grades continues to have an offsetting impact. Higher production at the Cuajone, La Caridad and IMMSA operations continues to lead to higher silver production. Production of molybdenum, its main by-product, has been high courtesy of rising production at the Peruvian mines, namely the Toquepala mine after throughput increased at the new Molybdenum plant, spurred by improvements in ore grades and recoveries at other operations.

Copper prices have gained throughout the first quarter on the back of strong demand from China while production has been declining in Chile, which is the top producer of the metal. The pickup in global industrial activity has also worked in favor of the industrial metal. Average silver prices have also been riding high on the back of increase in industrial activity. Zinc prices have also gone up in the first quarter. Higher production levels and rising metal prices might have benefited the company’s first-quarter performance. However, operating cash costs are expected to be higher in the to-be-reported quarter due to lower grades. This may weigh on margins.

Share Price Performance

The company’s shares have gained 136.9% over the past year compared with the industry’s rally of 216.2%.

Stocks to Consider

Here are some Basic Materials stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

The Mosaic Company MOS has an Earnings ESP of +3.06% and a Zacks Rank of 1, currently.

Westlake Chemical Corporation WLK has a Zacks Rank #1 and an Earnings ESP of +0.64%, at present.

Bunge Limited BG, currently a Zacks #2 Ranked stock, has an Earnings ESP of +7.19%.

Zacks Top 10 Stocks for 2021

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report

Westlake Chemical Corporation (WLK) : Free Stock Analysis Report

Bunge Limited (BG) : Free Stock Analysis Report

The Mosaic Company (MOS) : Free Stock Analysis Report

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