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

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Southern Copper Corporation SCCO is likely to register a year-over-year decline in earnings when it reports first-quarter 2022 results next week. Upbeat prices for Southern Copper's main metals might get reflected in its top line. However, lower production might have weighed on earnings. Meanwhile, the company's concerted efforts to improve cost efficiency and productivity may have aided its earnings despite higher costs.

Q4 Results

In the last reported quarter, the company's earnings and sales improved year over year. While earnings missed the Zacks Consensus Estimate, revenues beat the same.

The company has surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 3.22%.

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 2022 earnings per share is currently pegged at 98 cents, indicating a 1% decline from the prior-year quarter. The estimate has moved down 2% over the past 30 days. The consensus mark for the quarter's revenues stands at $2.68 billion, suggesting year-over-year growth of 5.9%.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Southern Copper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: The Earnings ESP for Southern Copper is 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Southern Copper currently carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank stocks here.

Key Factors to Note

Copper accounts for more than 80% of the company's sales. Over the past few quarters, the company has been witnessing lower production at its Peruvian mines due to lower ore grades. This trend is expected to continue through 2022 and recover thereafter. On top of this, operations at its Cuajone mine in Peru had to be halted from Feb 28 amid protests by local communities. Thus, the first-quarter 2022 production numbers are likely to be down. This may, however, be somewhat offset by higher production at its Mexican mines.

Overall, silver production is likely to be lower on account of lesser production at Buenavista, IMMSA and Toquepala. Production of molybdenum, its main by-product, has been high due to 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. The Buenavista mine might have contributed to the to-be-reported quarter's performance.

Copper prices have been trending up in the first quarter compared with the year-ago quarter, supported by the Russia-Ukraine conflict and concerns of supply disruptions amid robust demand. Zinc prices have been surging amid concerns of further supply disruptions as energy prices remain high. Molybdenum prices have been on an uptrend fueled by solid demand. Silver has been gaining on the ongoing war between Russia and Ukraine and increasing inflationary pressures that lifted the safe-haven bids for the precious metal. Overall higher metal prices are likely to get reflected in the company's first-quarter top line.

Operating cash costs might have been higher in the to-be-reported quarter due to lower grades. This may have weighed on margins. However, higher metal prices and savings from the company's stringent cost control measures are likely to have negated some of the impacts.

Share Price Performance

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company's shares have gained 3.2% over the past year compared with the industry's rally of 19.1%.

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.

Teck Resources TECK has an Earnings ESP of +6.52% and a Zacks Rank #1. The Zacks Consensus Estimate for the company's earnings for the first quarter of 2022 indicates year-over-year growth of 339.6%. The estimate has moved up 3% over the past 30 days.

Teck Resources has an average surprise history of 13%. TECK's shares have gained 102% over the past year.

Carpenter Technology CRS has an Earnings ESP of +10.99% and a Zacks Rank #2. The Zacks Consensus Estimate for the first quarter of 2022 suggests a loss of 30 cents.

Shares of Carpenter Technology have gained 11.1% over the past year. CRS' earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 21.8%.

Huntsman HUN has an Earnings ESP of +1.88% and a Zacks Rank #3.

The Zacks Consensus Estimate for the company's earnings for the first quarter of 2022 indicates year-over-year growth of 51.5%. The estimate has moved up 2% over the past 30 days.

Shares of Huntsman have appreciated 27.6% over the past year. HUN's earnings beat the consensus mark in each of the trailing four quarters, the average surprise being 10.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

Huntsman Corporation (HUN) : Free Stock Analysis Report

Teck Resources Ltd (TECK) : Free Stock Analysis Report

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