SCC Gets Upgraded Rating!
Â
Southern Copper Corporation (SCCO, Financial) is a copper producer and a leading mining company. The company was incorporated in Delaware in 1952, and the stock trades on the New York Stock Exchange (NYSE). The company’s ticker symbol is SCCO, and it also trades on the Lima Stock Exchange. In 2014 the company’s sales were recorded at $5.8 billion with net revenues of $1.3 billion.
SCC also distributed $381 million in dividends with an EBITDA of $2.7 billion. Southern Copper Corporation employs 12,735 people. Southern Copper Corp was recently upgraded to a buy rating by several analysts. The stock has a price objective of $39 with an upside of 27% from the stock’s previous day’s close.
The stock has been trading at a 52-week low of $23.60 and a 52-week high of $33.90. The stock’s market capitalization is $24.51 billion. The company’s price/earnings ratio is 19.51 with an Earnings Per Share of 1.57. SCC is involved in the smelting, mining and exploration of copper from countries across Latin America. These include Ecuador, Chile, Peru and Argentina. The company is based in Phoenix, Arizona and is a subsidiary of Americas Mining Corporation.
Stock Rating: Buy – Hold or Sell?
The stock is presently rated at a value of 2.5 which is heavily slanted towards a strong buy (reading of 1.0). On the scale system, a sell is rated at 5.0. The price target summary for Southern Copper Corporation is $35.25 and the median target is $35. The high value price target is $41 and the low target is $29.20. Prior to the last upgrade, the stock was downgraded to neutral status from buy by Citigroup (C, Financial) on April 29 2015.
According to Thomson/First Call, Southern Copper Corporation is currently rated as a buy by six analysts and a hold by eight analysts. This is the same position taken by analysts a month ago. Previously, Southern Copper Corporation was rated as a strong buy in May 2015.
Major Shareholders in Southern Copper Corporation
The top institutional holders of stock in Southern Copper Corp. include the following companies:
• BlackRock Group Limited with 1.25% out valued at $290 million
• Price (T. Rowe) Associates Inc with 0.98% out valued at $227,943,859
• BlackRock Advisors, LLC with 0.82% out valued at $190,479,803
Within the company’s organizational structure, some 83% of shares are held by all insider and 5% owners. 13% of shares are held by Institutional and Mutual fund owners and 75% of float is held by Institutional and Mutual fund owners. In total, some 335 institutions hold shares in SCC.
On April 24 2015, Southern Copper Corporation announced its earnings. The reports indicated that SCC generated $0.35 earnings per share for Q1. This exceeded the expectations of Thomson Reuters which forecast $0.29. The $0.06 differential helped to boost the rating of SCC substantially from a hold to a buy. However, the revenues for the company came in below expectations of $1.33 billion at $1.27 billion.
A year previously, the EPS were reported at $0.39. Year-on-year, quarterly revenues were down 5.9 percentage points. For the present year, it is expected that SCC will post earnings of $1.55 per share. While the majority of analysts, Banc De Binary included, have given this company a Hold rating there are several ranking companies that have upgraded their rating to a Buy. SCC is known as an integrated producer of copper. It also produces silver, zinc and molybdenum. The operating segments are located in Mexican underground mining, Mexican open-pits and Peruvian operations.
The viability of investing in copper
Copper is one of the most useful and important commodities in the world. While it has not garnered the attention of gold, silver and palladium, it certainly warrants the attention of investors and traders. Besides, for being one of the most important electrical conductors, it is corrosion resistant and highly flexible. Copper is used in multiple applications including lighting, transformers, electrical, computing, plumbing, heating and roofing et al. It is arguably the world’s most useful metal. From 2001 figures, the price of spot copper has spiked as much as 390%, with silver up 188% and gold up 150%.
There are commodities brokers who feel that the price of copper is due for a major correction. However, the fundamentals of the copper industry are sound and there is unlikely to be a major correction or downward revision in the price of copper. In fact, all signs are pointing to a rise in the price of copper moving forward. Since global production is limited and sources of supply are limited it stands to reason that the price of copper will only increase over time. Two countries that are spurring demand for copper are China and India. The sheer tonnage required by these countries defies belief. Copper consumption has even exceeded the production of copper during 1998-2005. What this means is that copper stockpiles have been depleted and prices have spiked as a result.
At last count, the price of copper (spot per pound) on June 12, 2015 was trading at $2.6995. The price is the lowest to date for June 2015, with a high of $2.7580 recorded on June 2, 2015. The price of copper has not exceeded $3 in 2015 at any point. It should be remembered that there are no new supply sources of copper in the world. In fact, no new copper mines have been discovered in over a century. The ratio of copper production to copper discovery is unsustainable, and that’s why in the absence of new copper mine discoveries there will be nowhere for prices to go but up.
