Will EPS Decline and Revenue Growth Shift Southern Copper's (SCCO) Long-Term Investment Story?

• Earlier this week, Southern Copper drew investor focus after the company was expected to report a 3.48% decline in EPS compared to last year, offset by a forecasted 5.28% rise in revenue, amid sector-wide optimism.
• This divergence between shrinking earnings per share and growing revenue, along with the company's shares trading at a discount to peers, has raised questions about near-term profitability versus long-term growth prospects.
• With mixed earnings expectations in mind, we'll examine how the forecasted EPS decline may impact Southern Copper's investment case.

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Southern Copper Investment Narrative Recap

Being a Southern Copper shareholder means believing in the company’s ability to deliver long-term growth through major mine expansions and increased production, despite ongoing price and operating margin pressures. The recent expectation of declining EPS alongside revenue growth does not appear to materially alter the primary short-term catalyst: successful cost management and project execution, while keeping a close eye on ongoing margin risks.

One of the most relevant recent announcements is the July dividend increase to $0.80 per share. While Southern Copper’s revenue and production trends are under scrutiny, this move underscores management’s ongoing focus on returning cash to shareholders, which may provide some reassurance amid uncertainty about short-term earnings but does little to offset questions around margin pressure and the future trajectory of costs.

In contrast, if there are sharp increases in operating costs or prolonged pressures on profit margins, investors should be aware that...

Read the full narrative on Southern Copper (it's free!)

Southern Copper's outlook anticipates $13.0 billion in revenue and $4.3 billion in earnings by 2028. This projection implies annual revenue growth of 3.1% and a $0.7 billion increase in earnings from the current $3.6 billion.

Uncover how Southern Copper's forecasts yield a $95.25 fair value, a 10% downside to its current price.

Exploring Other Perspectives

Six different fair value estimates from the Simply Wall St Community range from US$45 to over US$124 per share. Many are weighing future margin risks and cost pressures when judging where Southern Copper could head next, reflecting just how much opinions can differ and why it's worth considering a variety of perspectives.

Explore 6 other fair value estimates on Southern Copper - why the stock might be worth as much as 17% more than the current price!

Build Your Own Southern Copper Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Southern Copper research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Southern Copper research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southern Copper's overall financial health at a glance.

No Opportunity In Southern Copper?

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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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