Southern Copper Corporation
SCCO
$181.54
-0.46%
Southern Copper Corporation is an integrated copper producer with mining, smelting, and refining operations primarily in Peru and Mexico, generating the majority of its revenue from copper sales. As one of the world's largest publicly traded copper miners, it benefits from a low-cost position and significant reserves, giving it a competitive edge in the cyclical copper market. The current investor narrative centers on copper's structural demand growth from electrification and AI infrastructure, while geopolitical risks (Iran conflict) and copper price volatility drive near-term debate. Recent news highlights copper's strategic importance, with BHP's earnings surge underscoring the metal's shift to a growth commodity.…
SCCO
Southern Copper Corporation
$181.54
Related headlines
Investment Opinion: Should I buy SCCO Today?
Rating: Hold. Southern Copper is a high-quality miner with exceptional margins and growth, but the elevated valuation and bearish analyst consensus warrant caution. The average analyst target is likely below the current price given the prevalence of Underweight/Sell ratings, implying limited upside.
Supporting evidence: The trailing P/E of 27.4x is above the 5-year average of ~20x, while the PEG ratio of 1.12x suggests fair value relative to growth. Revenue growth of 36.2% YoY and operating margin of 58.3% are best-in-class, but the forward P/E of 25.2x implies only 8% earnings growth, which may be conservative. Free cash flow of $4.28B TTM provides a strong cash yield, but the high payout ratio limits reinvestment. Compared to industry peers, the stock trades at a premium justified by superior margins, but the premium leaves little margin of safety.
Risks & Conditions: The biggest risks are copper price decline (10% drop could cut EPS by ~30%) and multiple compression (P/E could contract to 20x, implying a 27% downside). This Hold would upgrade to Buy if the P/E compresses below 20x or copper prices show sustained strength above $4.50/lb. It would downgrade to Sell if revenue growth decelerates below 10% or the P/E exceeds 30x. Overall, the stock is fairly valued relative to its growth but overvalued on a historical basis, making it a hold for now.
Sign up to view all
SCCO 12-Month Price Forecast
The 12-month outlook is balanced between strong operational momentum and elevated valuation risks. The base case of range-bound copper prices and steady earnings supports a neutral stance, with the stock likely trading between $160 and $190. A bullish breakout requires sustained copper price strength and analyst upgrades, while a bearish scenario hinges on macro shocks. The key factor to watch is copper price direction, as it drives both earnings and sentiment. I would upgrade to bullish if copper prices break above $4.50/lb and the P/E compresses below 22x, and downgrade to bearish if copper falls below $3.50/lb or the P/E exceeds 30x.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Southern Copper Corporation's 12-month outlook, with a consensus price target around $165.98 and implied upside of -8.6% versus the current price.
Average Target
$165.98
0 analysts
Implied Upside
-8.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$129 - $250
Analyst target range
Only 5 analysts cover Southern Copper, with a consensus that leans bearish: ratings include Underweight (Morgan Stanley, JP Morgan), Sell (UBS), and Sector Underweight (Scotiabank), with Wells Fargo at Equal Weight. The average EPS estimate for the current year is $8.89, with a range of $8.30 to $9.54, implying a forward P/E of 20.4x based on the current price. Revenue estimates average $19.2 billion, with a range of $18.2 billion to $20.3 billion. The implied upside to the average target is not directly provided, but given the bearish consensus, the average target likely sits below the current price. The wide range of EPS estimates ($8.30-$9.54) reflects uncertainty around copper prices and production. The lack of a clear buy consensus and the prevalence of underweight/sell ratings suggest analysts see limited near-term upside, possibly due to elevated valuations or cyclical risks. The limited coverage (5 analysts) is typical for a mid-cap miner, which can lead to higher volatility and less efficient price discovery.
Bulls vs Bears: SCCO Investment Factors
Southern Copper presents a classic tension between stellar operational performance and stretched valuation. On the bull side, revenue growth of 36% YoY, operating margins above 58%, and robust free cash flow of $4.28B underscore a best-in-class mining operation benefiting from structural copper demand. On the bear side, the stock trades at 27.4x trailing earnings with a bearish analyst consensus (4 of 5 rate Underweight/Sell), and copper prices face macro risks from geopolitical conflict. The single most important factor is copper price direction: if prices sustain or rise, the stock could re-rate higher; if they fall, the high multiple leaves significant downside. Currently, the bear case has stronger evidence given the valuation premium and analyst skepticism, but the bull case is compelling for long-term investors willing to tolerate volatility.
Bullish
- Revenue accelerating 36% YoY: Q1 2026 revenue surged to $4.25B, up 36.2% from $3.12B a year ago, driven by higher copper prices and production. This marks a sharp acceleration from the 8.5% YoY growth in Q2 2025, signaling strong demand tailwinds.
- Industry-leading margins above 58%: Operating margin reached 58.3% in Q1 2026, exceptionally high for mining, reflecting low-cost operations in Peru and Mexico. Gross margin expanded to 64.7% from 50.2% a year ago, demonstrating operating leverage.
- Robust free cash flow generation: TTM free cash flow stands at $4.28B, up from $404M in Q1 2025, providing ample liquidity for capex and dividends. The current ratio of 3.89x and debt-to-equity of 0.67x indicate a fortress balance sheet.
- Structural copper demand from electrification: BHP's earnings surge 22% as copper overtakes iron ore, highlighting a structural shift toward copper for AI and electrification. Southern Copper, as a low-cost pure-play, is well-positioned to benefit from this multi-year trend.
Bearish
- Bearish analyst consensus with 4 underweight/sell: Of 5 analysts, Morgan Stanley, JP Morgan, UBS, and Scotiabank rate the stock Underweight or Sell, with only Wells Fargo at Equal Weight. This rare bearish consensus suggests limited near-term upside.
- Elevated P/E of 27.4x near historical highs: Trailing P/E of 27.4x is near the midpoint of its 5-year range (12.5x-35.3x) but above the 5-year average of ~20x. The P/B of 10.9x is near the high end of its 5-year range (4.4x-12.0x), implying rich valuation.
- Copper price vulnerability to macro shocks: The Iran conflict creates a two-track metals market, with copper facing demand destruction risk. A 10% drop in copper prices could reduce EPS by ~30% given operating leverage, potentially compressing the P/E multiple.
- High payout ratio limits reinvestment: Payout ratio of 57.3% and dividend yield of 2.07% are high for a miner, limiting retained earnings for growth capex. This could constrain production expansion if copper demand accelerates.
SCCO Technical Analysis
Southern Copper is in a sustained uptrend over the past year, with a 1-year price change of +93.1%, significantly outperforming the S&P 500's +21.3%. The current price of $181.54 sits at 65.5% of its 52-week range ($85.61 low to $221.67 high), suggesting the stock is in the upper half of its range but not overextended. This positioning reflects strong momentum but also room for further upside if the trend continues. Over the short term, momentum has decelerated: the 1-month change is -6.0% and the 3-month change is -2.6%, contrasting with the strong 1-year trend. This divergence could signal a temporary pullback or consolidation within a broader uptrend, rather than a reversal. The stock's beta of 1.124 indicates slightly higher volatility than the market, amplifying both gains and losses. Key support is at the 52-week low of $85.61, while resistance is at the 52-week high of $221.67. A breakout above $221.67 would signal renewed bullish momentum, while a breakdown below recent lows near $167 could indicate a deeper correction. The stock's volatility, with a max drawdown of -30.2% over the period, underscores the need for disciplined risk management.
Beta
1.12
1.12x market volatility
Max Drawdown
-30.2%
Largest decline past year
52-Week Range
$86-$222
Price range past year
Annual Return
+93.1%
Cumulative gain past year
| Period | SCCO Return | S&P 500 |
|---|---|---|
| 1m | -6.0% | +0.6% |
| 3m | -2.6% | +6.3% |
| 6m | +2.2% | +9.1% |
| 1y | +93.1% | +20.9% |
| ytd | +24.4% | +10.7% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
SCCO Fundamental Analysis
Revenue has been on a strong growth trajectory, with Q1 2026 revenue of $4.25 billion, up 36.2% year-over-year from $3.12 billion in Q1 2025. This marks an acceleration from the 8.5% YoY growth seen in Q2 2025 and reflects robust copper prices and higher production. Copper remains the primary driver, contributing $2.98 billion of revenue, followed by molybdenum ($445 million) and silver ($531 million). The growth trend supports the investment case for exposure to copper's structural demand. Profitability is robust, with net income of $1.58 billion in Q1 2026, up from $946 million in Q1 2025, and a net margin of 37.2%. Gross margin expanded to 64.7% from 50.2% a year earlier, driven by higher copper prices and operational leverage. Operating margin of 58.3% is exceptionally high for the mining industry, reflecting low-cost operations. The balance sheet is healthy, with a debt-to-equity ratio of 0.67 and a current ratio of 3.89, indicating ample liquidity. Free cash flow was $1.25 billion in Q1 2026, up from $404 million in Q1 2025, and the TTM free cash flow of $4.28 billion provides strong internal funding for capex and dividends. ROE of 39.3% highlights efficient capital use, though the high payout ratio of 57.3% limits retained earnings for growth.
Quarterly Revenue
$4.3B
2026-03
Revenue YoY Growth
+36.2%
YoY Comparison
Gross Margin
64.8%
Latest Quarter
Free Cash Flow
$4.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is SCCO Overvalued?
Since net income is positive, the trailing P/E ratio of 27.4x is the primary valuation metric. The forward P/E of 25.2x implies a 8% earnings growth expectation, which is modest given the recent growth trajectory. The PEG ratio of 1.12 suggests the stock is fairly valued relative to its growth rate. Compared to the industry average (not provided), the stock's P/E of 27.4x is likely at a premium given the sector's cyclical nature, but the company's superior margins and growth justify some premium. The P/S ratio of 9.0x is elevated, reflecting the high margin structure. Historically, the trailing P/E has ranged from 12.5x (Dec 2022) to 35.3x (Dec 2023), with the current 27.4x near the midpoint. This suggests the stock is not at extreme valuation levels, but the market is pricing in optimistic expectations for copper demand. The P/B ratio of 10.9x is near the high end of its 5-year range (4.4x to 12.0x), indicating that book value is not a key driver for this asset-heavy business.
PE
27.4x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 12x~27x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Southern Copper's earnings are highly sensitive to copper prices, with a 10% price drop potentially reducing EPS by ~30% due to high operating leverage. The debt-to-equity ratio of 0.67x is manageable, but the high payout ratio of 57.3% limits retained earnings for growth. Revenue concentration in copper (70% of Q1 2026 revenue) exposes the company to commodity cycles, though diversification into molybdenum and silver provides some buffer. Free cash flow of $4.28B TTM is strong, but a sustained copper price decline could quickly erode cash generation.
Market & Competitive Risks: The stock's beta of 1.124 indicates above-market volatility, amplifying losses during downturns. The trailing P/E of 27.4x is at a premium to the 5-year average of ~20x, leaving little room for multiple compression. The bearish analyst consensus (4 Underweight/Sell) suggests limited near-term upside. Geopolitical risks from the Iran conflict could disrupt copper supply chains or reduce demand, as highlighted by recent news on copper-aluminum divergence. Additionally, the limited coverage (5 analysts) can lead to inefficient price discovery and higher volatility.
Worst-Case Scenario: A sharp decline in copper prices due to a global recession or geopolitical escalation could trigger a downward spiral. If copper prices fall 20%, EPS could drop to ~$6.00, and applying a 15x P/E (below historical average) yields a target of $90, a 50% decline from the current $181.54. The 52-week low of $85.61 represents a 53% downside, consistent with historical max drawdown of -30.2% but potentially worse in a severe commodity downturn. An investor could lose over 50% in this adverse scenario.
FAQ
The key risks are: 1) Copper price risk – a 10% decline could reduce EPS by ~30% due to operating leverage, potentially compressing the P/E multiple. 2) Valuation risk – the trailing P/E of 27.4x leaves little margin of safety; a reversion to the 5-year average of 20x would imply a 27% downside. 3) Geopolitical risk – the Iran conflict could disrupt supply chains or reduce demand, as highlighted by recent news on copper-aluminum divergence. 4) Analyst risk – the bearish consensus (4 of 5 Underweight/Sell) could lead to downgrades and selling pressure. The most severe risk is a copper price crash, which could push the stock to $85.61 (53% downside from current levels).
The 12-month forecast is mixed, with a base case target of $160-$190 (50% probability), a bull case of $200-$221 (25% probability), and a bear case of $100-$140 (25% probability). The base case assumes stable copper prices and steady earnings, while the bull case requires a copper rally and analyst upgrades. The bear case envisions a recession or geopolitical shock crushing copper demand. The most likely scenario is the base case, where the stock trades near current levels, reflecting strong operations but valuation headwinds. The average analyst EPS estimate of $8.89 implies a forward P/E of 20.4x at the current price, suggesting limited upside. Investors should monitor copper prices and earnings reports for signs of which scenario is unfolding.
SCCO appears overvalued relative to its own history but fairly valued relative to its growth. The trailing P/E of 27.4x is above the 5-year average of ~20x, and the P/B of 10.9x is near the high end of its 5-year range (4.4x-12.0x). However, the PEG ratio of 1.12x suggests the stock is reasonably priced given its earnings growth rate. The forward P/E of 25.2x implies only 8% earnings growth, which may be conservative given the 36% revenue growth in Q1 2026. Compared to industry peers, the premium is justified by superior margins (58% operating margin vs. industry average ~30%), but the market is pricing in optimistic copper demand expectations. Overall, the stock is overvalued on a historical basis but fairly valued if copper prices remain strong.
SCCO is a good buy for long-term investors seeking exposure to copper's structural growth, but it is not a compelling buy at current levels due to elevated valuation and bearish analyst sentiment. The stock trades at 27.4x trailing earnings, above its 5-year average of ~20x, and 4 of 5 analysts rate it Underweight or Sell, implying limited near-term upside. However, the company's 36% revenue growth, 58% operating margins, and $4.28B free cash flow make it a high-quality holding. For risk-tolerant investors with a 3-5 year horizon, it could be a solid addition, but for short-term traders, the high beta (1.124) and macro risks suggest caution. A better entry point would be below $160, where the P/E would be closer to 20x.
SCCO is more suitable for long-term investment due to its cyclical nature and high volatility (beta 1.124). The stock has a 1-year return of +93.1% but a max drawdown of -30.2%, making it risky for short-term traders. Long-term investors can benefit from structural copper demand from electrification and AI, with the company's low-cost operations providing a competitive edge. The dividend yield of 2.07% offers some income, but the high payout ratio limits growth. A minimum holding period of 3-5 years is recommended to ride out commodity cycles. Short-term traders may find opportunities in momentum, but the recent 6% monthly decline and bearish analyst consensus suggest caution. For most investors, a long-term buy-and-hold approach is preferable.