Southern Copper Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Southern Copper Corporation (NYSE:SCCO) just released its latest quarterly results and things are looking bullish. Southern Copper beat earnings, with revenues hitting US$2.1b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 18%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Southern Copper

Taking into account the latest results, the consensus forecast from Southern Copper's twelve analysts is for revenues of US$8.19b in 2021, which would reflect a meaningful 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 43% to US$2.38. In the lead-up to this report, the analysts had been modelling revenues of US$8.03b and earnings per share (EPS) of US$2.29 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$42.23, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Southern Copper analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$29.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 9.4%, in line with its 8.7% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 8.2% next year. So although Southern Copper is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Southern Copper following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$42.23, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Southern Copper. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Southern Copper going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 3 warning signs for Southern Copper that we have uncovered.

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