Southern Copper Corporation (SCCO) was incorporated on September 7, 1995 and engaged in integrated copper mining with operations in Mexico, Argentina, Ecuador, Peru, and Chile. It is one of the biggest American companies and Fortune 500 lists SCCO at number 127. Being one of the largest companies, an investor will surely be tempted to buy shares of stocks from SCCO, but buying stocks need not be based on the size of the company alone. There many factors that need to be considered like looking the company’s revenue history, its net profit, the competition, among many others. Another analysis tool that can be employed is benchmarking. For this analysis, the available company data, as extracted from the stock market specifically from Yahoo Finance website, will be the main consideration. Stock analysts forecasts will be factored in, as well, as they represent the educated sector of stock investing.
Southern Copper Corporation is known by its ticker “SCCO” in the stock market. Its stocks are traded at NASDAQ. The latest available data lists SCCO’s stock price at $45.09 with a market cap at $34.86B. Its Price to Earnings (P/E) ratio which represents its current share price compared to its per-share earnings is listed at 39.38% with a $ 1.20 dividend per share of stock with an expected annual yield of 2.66%. The expected yield might not be very attractive but it is good enough as it is above the U.S. interest rate of about 2%.
The enterprise value which represents the company’s total value after factoring in debts, cash and investments is at $40.77B, which is higher by $5.91B compared to its market cap. With beta of 0.42, this means that the stocks’ price does not move in the same way that the overall stock market does, and is expected to be moving on its own strength or weakness. Looking at its history of stock split, record show that there was one on July 11, 2008 and this was done to correct its stock value which had skyrocketed to $40.42 from the prior quarter. Closing prices in the last 5 stock trading days were $46.48, $46.31, $44.52, $44.79, and $45.19. The last highest stock price in the last 52 weeks was $58.09 and book value of a share of stock is at $7.70.
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In July of last year, higher prices of copper pushed the stock price higher with its adverse effect on the market. On April, 2018, Southern Copper rating was downgraded from ‘buy’ to ‘neutral’. Another news on June, 2018 stated that following weak economic data of China, copper performance dropped to a YTD low (MarketWatch,2018).
According to CNN Money’s survey of 12 analysts, the next year’s targeted price forecast ranges from a low of 33.95 to a high of 58.00 with a median of 44.00 (CNN Money,2018). Comparing the median forecast with the current $45.09 stock price, there is a slight decrease of 2.42% in the forecasted stock price. With 13 analysts responding, 7 is recommending ‘hold’ while 6 favored ‘sell’ SCCO stocks. This rating was unchanged from the last rating on July. In a separate poll by Thomson Reuters involving 9 analysts, the mean consensus of target price is $46.30 which is an improvement of 2.7% from the current stock price. Nonetheless, 4 of the analysts listed SCCO stock as ‘hold’ while the other 5 analysts rated the stock as ‘sell’.
The revenue forecast for the next two quarters saw 2 analysts predicting average revenue of $1.81 Billion for the current quarter. The Higher end of the revenue forecast is $1.83 Billion, while the Lower end of the forecast is $1.79 Billion. The revenue was $1.94 Billion for the same quarter a year ago, which would mean that the analysts would forecast downward fall of 6.7% in the revenue.
Basing on the stock’s performance which shows its yield just slightly above the U.S. interest rate with all the risks inherent in the market, and a beta of 0.42 which makes the stock price unpredictable, it is not recommended to buy SCCO’s stock. If the other factors like the unfavorable news on the copper industry and stocks analysts’ perception of SCCO’s stock performance, it is not recommended to buy stocks from SCCO at this time.