Southern Copper (NYSE:SCCO): Assessing Valuation After Tía María Project Approval Clears Key Hurdle

Southern Copper (NYSE:SCCO) has received the green light from Peru’s Ministry of Energy and Mines for its Tía María project, moving past years of delays related to social and political concerns. This approval sets the stage for expanded copper production and positions the company for future growth.

See our latest analysis for Southern Copper.

With the long-awaited Tía María approval in hand, Southern Copper has seen momentum build, logging a 10.6% share price gain over the past month and a remarkable 44% year-to-date rally. While metals prices remain volatile, investors who have stuck around saw their one-year total shareholder return reach almost 20%. Over the last three years, that return reached a truly staggering 221%, showing that confidence in the company’s growth prospects continues to be well rewarded.

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But with shares already on a tear this year, investors may wonder whether Southern Copper is now trading above its true value or if the latest milestone presents a new entry point for long-term investors.

Most Popular Narrative: 17% Overvalued

Southern Copper's most widely followed valuation narrative puts the company's fair value at $110.54, about 17% below its last close of $129.34. This perspective sets the expectation that recent momentum may have outpaced fundamentals, inviting closer inspection of the numbers behind the price.

Southern Copper has announced substantial capital investments totaling over $15 billion, including projects in Mexico and Peru, which are expected to drive future production growth and potentially boost revenue significantly.

The company's Buenavista zinc concentrator is now operating at full capacity, anticipated to drive a 31% increase in zinc production in 2025, likely enhancing revenues and improving net margins due to efficient operations.

Read the complete narrative.

Curious what bold assumptions make this fair value tick? Behind the headline figure are future expansion bets, game-changing margin moves, and a big call on sustained earnings growth. The full narrative unpacks each lever that drives this valuation, offering insights into what could push the stock even higher or limit its upside.

Result: Fair Value of $110.54 (OVERVALUE)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing cost pressures and possible project delays remain key risks. These factors could disrupt Southern Copper’s growth story and challenge the current valuation thesis.

Find out about the key risks to this Southern Copper narrative.

Build Your Own Southern Copper Narrative

If you see things differently or want to dig into the numbers yourself, you can shape your own view in just a few minutes, and Do it your way.

A great starting point for your Southern Copper research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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