SOUTHERN COPPER CORP (NYSE:SCCO) – A Quality Stock in the Metals & Mining Sector

SOUTHERN COPPER CORP (NYSE:SCCO) stands out as a potential candidate for quality investors, meeting key financial criteria that signal strong profitability, efficient capital allocation, and sustainable growth. The company operates in the metals and mining industry, with a focus on copper, molybdenum, zinc, and silver production across Peru and Mexico.

Key Strengths for Quality Investors

• High Return on Invested Capital (ROICexgc): SCCO’s ROIC of 27.48% (excluding cash and goodwill) is well above the 15% threshold for quality stocks, indicating efficient use of capital.
• Strong Profitability: The company maintains an operating margin of 49.35% and a profit margin of 30.00%, outperforming most peers in the industry.
• Revenue and EBIT Growth: Over the past five years, SCCO has delivered revenue growth of 5.10% annually, while EBIT growth has been even stronger at 15.07%, suggesting improving operational efficiency.
• Healthy Debt Management: With a debt-to-free-cash-flow ratio of 2.16, SCCO could repay its debt in just over two years using current cash flows, reflecting financial stability.
• Profit Quality: The company converts 103.23% of net income into free cash flow (5-year average), indicating high earnings quality and effective cash generation.

Fundamental Analysis Summary

SCCO scores 7 out of 10 in our fundamental rating, with standout performance in profitability and financial health. Key highlights include:

• Profitability (10/10): Exceptional margins and returns on capital.
• Health (7/10): Strong liquidity and manageable debt levels, though leverage is slightly higher than some peers.
• Valuation (4/10): Priced at a premium (P/E of 23.47), but justified by strong fundamentals.
• Growth (5/10): Solid historical growth, though future EPS expansion is expected to slow.

For investors seeking quality stocks with durable competitive advantages, SCCO presents a compelling case.

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Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.