On Jun 4, 2016, Zacks Investment Research upgraded Southern Copper Corp. (NYSE:SCCO) to a Zacks Rank #1 (Strong Buy). The stock is considered a good investment by analysts.
TECK RESOURCES (TCK): Free Stock Analysis Report
BILLITON ADR (BBL): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
CINER RESOURCES (CINR): Free Stock Analysis Report
Original post
Zacks Investment Research
Why the Upgrade?
Southern Copper reported earnings of 24 cents a share for first-quarter 2016, beating the Zacks Consensus Estimate of 16 cents. The company reported sales of $1,245 million that missed the Zacks Consensus Estimate due to lower average sales price of metals including copper, silver, molybdenum and zinc.
In the first quarter of 2016, it increased production by 24.8% year over year to 221,661 tons. This rise was primarily driven by the 43,898 tons or 67.6% higher production at the Buenavista mine. In 2016, Southern Copper will continue working on its goal of increasing copper production capacity by 90% of its 2013 level of 617,000 tons, to 1.2 million tons. In 2016, the company is also looking to increase production of by-products, silver and zinc, by 21% and 41%, respectively. In the reported quarter, the production of these two metals rose 25.7% and 18.6% year over year, respectively.
In first-quarter 2016, Southern Copper saw certain easing of macroeconomic pressures. The company’s primary target market in developing economies is China, the largest copper consumer. The recovering housing market in the country has made the company optimistic and it now predicts 3.5% copper demand growth in 2016. On the supply side, the production of copper has reduced worldwide. A slightly lower growth outlook for copper will help increase its average sales price, the biggest headwind for the company. The depreciation of the U.S. dollar also helped Southern Copper in the first quarter against the headwinds faced previously.
Southern Copper has several mining projects under expansion. These projects are on track and scheduled to be completed on time. The Buenavista project is expected to be completed under budget and the New Copper-Molybdenum Concentrator facility has shown promising initial results. In Peru, the company has reached an agreement to purchase power at competitive costs to further reduce the cost of production.
Southern Copper is concentrating on expansion at most of its mines in addition to cost controlling initiatives. The consistently decreasing cost per unit is keeping the company competitive in the low price environment, generating cash to maintain a strong financial position.
Estimate Revisions
Southern Copper has been witnessing upward earnings estimate revisions over the past 60 days. The Zacks Consensus Estimate for 2016 has jumped 25% over this period. Similarly, the Zacks Consensus Estimate for 2017 has increased 7.1% over this time frame.
Other Stocks to Consider
Some other well-ranked companies in the mining space include BHP Billiton (LON:BLT) plc (NYSE:BBL) , Ciner Resources LP (NYSE:CINR) and Teck Resources Limited (NYSE:TCK) , all sporting a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
TECK RESOURCES (TCK): Free Stock Analysis Report
BILLITON ADR (BBL): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
CINER RESOURCES (CINR): Free Stock Analysis Report
Original post
Zacks Investment Research
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.