Southern Copper Corporation

Based on a comprehensive analysis, Southern Copper Corporation (SCCO) presents a compelling bull case driven by strong fundamentals and technical momentum, though its premium valuation requires careful consideration.

Technical & Fundamental Strength: The stock is in a powerful uptrend, significantly outperforming the market with strong recent momentum. This is supported by excellent fundamentals, including robust revenue growth, exceptional profitability (33.8% net margin), and a very healthy balance sheet with low debt and high liquidity.

Valuation & Risk Concerns: The primary caution is valuation. SCCO trades at a high TTM P/E of 39.45, which is steep for a commodity company, suggesting much future growth is already priced in. While the lower forward P/E of 23 indicates expected earnings improvement, the stock carries inherent volatility from commodity prices and mining sector risks.

Recommendation: BUY SCCO's impressive operational strength and positive price momentum make it an attractive holding for investors seeking exposure to a high-quality copper producer. The current valuation, while elevated, can be justified if the company continues to execute and benefit from strong long-term copper demand. Investors should consider a dollar-cost averaging strategy to mitigate timing risk associated with its premium price and inherent sector volatility.

*This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for Southern Copper Corporation (SCCO):

The outlook for SCCO is positive, primarily driven by the strong bullish trend in copper prices, which should benefit its exceptional profitability and robust operational performance. The key catalyst is sustained high demand for copper, fueled by the global energy transition and infrastructure spending. The primary risk is the stock's premium valuation (TTM P/E of 39.45), which makes it vulnerable to a downturn in commodity prices or any disappointment in earnings growth. While no specific analyst target is provided, a target price range could be estimated based on the forward P/E and sector multiples, suggesting potential for moderate upside contingent on stable or rising copper prices, but with significant volatility.

Wall Street Consensus

Most Wall Street analysts are optimistic about Southern Copper Corporation's 12-month outlook, with consensus target around $194.07, indicating expected upside potential.

Overall, SCCO has investment potential but also faces challenges. Here are key factors to weigh before investing.

SCCO has demonstrated exceptionally strong performance over the past year, significantly outperforming the broader market with substantial recent momentum. The stock has more than doubled from its 52-week low, reflecting robust bullish sentiment.

Over the past three months, SCCO has delivered impressive returns of 38.04%, substantially outpacing the market by 38.06%, while the more recent one-month gain of 3.62% indicates sustained positive momentum. This dramatic outperformance highlights the stock's strong upward trajectory, though its beta of 1.071 suggests it carries slightly above-market volatility.

Currently trading at $188, SCCO sits at approximately 77% of its 52-week range, suggesting it is in strong territory but not yet overbought near its highs. The moderate maximum drawdown of -25.47% over the past year indicates the stock has maintained relative stability during its ascent, positioning it favorably for continued strength.

Revenue & Profitability SCCO demonstrated strong quarterly revenue growth of 14.6% in Q4 2025 compared to Q3, advancing from $3.38B to $3.87B. Profitability remains robust with a gross margin of 62% and net margin of 33.8%, showing slight expansion from the previous quarter. The company maintains excellent operational leverage with a 54.5% operating margin.

Financial Health The company maintains a conservative debt structure with a low debt-to-equity ratio of 0.66 and strong interest coverage of 22.9x. Current ratio of 3.9 and quick ratio of 3.4 indicate ample liquidity, supported by $5.86 cash per share. These metrics reflect a solid balance sheet with minimal financial risk.

Operational Efficiency SCCO delivers respectable returns with ROE of 11.8% and ROCE of 11.0%, though asset turnover is modest at 0.18. Operating cycle efficiency is reasonable at 112 days with a cash conversion cycle of 59 days. The company maintains disciplined capital allocation with a 56.7% payout ratio, balancing shareholder returns with operational needs.

Based on SCCO's valuation metrics, the stock appears overvalued. The TTM PE ratio of 39.45 is exceptionally high for a commodity producer, indicating a significant premium to current earnings, though the lower forward PE of 23 suggests anticipated earnings growth. Supporting this view of overvaluation are the elevated PB ratio of 14.77 and a PEG ratio above 1.4, which implies the stock's price is not fully justified by its expected growth rate.

A peer comparison cannot be conclusively performed due to the unavailability of industry average data. Without sector benchmarks for PE, PB, or EV/EBITDA ratios, it is impossible to determine if SCCO's premium valuation is typical for its industry or an outlier. This lack of contextual data significantly limits the ability to draw a relative valuation conclusion.

Volatility Risk: SCCO exhibits moderate volatility risk, with a beta of 1.071 indicating it is slightly more volatile than the broader market. The 1-year maximum drawdown of -25.47% is substantial, reflecting significant downside price erosion during recent market stress and highlighting pronounced capital loss potential for investors.

Other Risks: A notable positive is the apparent absence of significant short interest, suggesting low speculation on a near-term price decline. However, broader operational risks inherent in the mining sector, such as commodity price fluctuations and geopolitical factors impacting operations, remain relevant considerations and are not mitigated by the favorable short interest reading.