Value
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 3.5 |
| EV/EBITDA | 2.1 |
| Fwd P/E | 5.0 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 25.0x
- ▸PEG: 0.38
SCCO · Why this verdict
Why Southern Copper (SCCO) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Southern Copper is an exceptional quality business — 46% return on equity, 34% net margins, a perfect Piotroski score of 9/9, and 4 consecutive earnings beats — but the stock has rallied past its analyst target by 23%, creating a wait-for-pullback situation despite strong underlying fundamentals.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew 36% year over year and the company beat earnings estimates in all 4 recent quarters with an average positive surprise of 6.4%, reflecting both commodity price tailwinds and operational discipline in managing production costs. Earnings | Revenue growth exceeds 10% year over year and earnings beats continue in at least 3 of the next 4 quarters. | →Stable |
| CounterRevenue growth driven primarily by copper price increases is not durable; consensus copper price forecasts suggesting mean reversion would imply a significant revenue decline even with flat or growing production volumes. | ||
Copper represents 75.9% of revenue and production is concentrated in Peru and Mexico, creating dual concentration risks — commodity price and geopolitical — that are elevated relative to diversified mining peers. Bear case | The company maintains production guidance without unplanned disruptions in either Peru or Mexico operations for the next 12 months. | →Stable |
| CounterGeographic concentration in low-cost jurisdictions with established regulatory frameworks can be a cost advantage rather than a risk; diversification for its own sake often destroys returns in mining. | ||
The current price of $193.22 is already 23.4% above the analyst consensus target on a raw basis, meaning the market has run well ahead of the fundamental valuation, leaving no margin of safety at current levels. Warnings | Price pulls back to the entry target of $170.24 or below, more than 11% below the current $193.22, restoring a favorable reward-to-risk ratio. | →Stable |
| CounterIn commodity supercycles, analyst price targets consistently lag market pricing because they are anchored to backward-looking commodity price decks; the market may be correctly anticipating a sustained copper demand surge that forecasters have not yet incorporated. | ||
The company generates a 46% return on equity with 34% net margins and a perfect Piotroski financial health score of 9/9, placing it in the top tier of all global mining companies on capital efficiency and balance sheet quality. Quality breakdown | Return on equity remains above 30% and net margins stay above 25% in the next 4 reported quarters. | →Stable |
| CounterCopper mining profitability is directly tied to commodity prices; a sustained copper price decline of 20-30% would compress margins dramatically regardless of operational excellence, as demonstrated in prior commodity cycles. | ||
Revenue grew 36% year over year and the company beat earnings estimates in all 4 recent quarters with an average positive surprise of 6.4%, reflecting both commodity price tailwinds and operational discipline in managing production costs.
→StableEarnings
- Expectation
- Revenue growth exceeds 10% year over year and earnings beats continue in at least 3 of the next 4 quarters.
CounterRevenue growth driven primarily by copper price increases is not durable; consensus copper price forecasts suggesting mean reversion would imply a significant revenue decline even with flat or growing production volumes.
Copper represents 75.9% of revenue and production is concentrated in Peru and Mexico, creating dual concentration risks — commodity price and geopolitical — that are elevated relative to diversified mining peers.
→StableBear case
- Expectation
- The company maintains production guidance without unplanned disruptions in either Peru or Mexico operations for the next 12 months.
CounterGeographic concentration in low-cost jurisdictions with established regulatory frameworks can be a cost advantage rather than a risk; diversification for its own sake often destroys returns in mining.
The current price of $193.22 is already 23.4% above the analyst consensus target on a raw basis, meaning the market has run well ahead of the fundamental valuation, leaving no margin of safety at current levels.
→StableWarnings
- Expectation
- Price pulls back to the entry target of $170.24 or below, more than 11% below the current $193.22, restoring a favorable reward-to-risk ratio.
CounterIn commodity supercycles, analyst price targets consistently lag market pricing because they are anchored to backward-looking commodity price decks; the market may be correctly anticipating a sustained copper demand surge that forecasters have not yet incorporated.
The company generates a 46% return on equity with 34% net margins and a perfect Piotroski financial health score of 9/9, placing it in the top tier of all global mining companies on capital efficiency and balance sheet quality.
→StableQuality breakdown
- Expectation
- Return on equity remains above 30% and net margins stay above 25% in the next 4 reported quarters.
CounterCopper mining profitability is directly tied to commodity prices; a sustained copper price decline of 20-30% would compress margins dramatically regardless of operational excellence, as demonstrated in prior commodity cycles.
Per-dimension breakdown
Quality
9.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 8.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.6 |
| FCF quality | 6.3 |
| Moat | 8.2 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 46%
- ▸Strong margins: 34%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 36% YoY
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 40) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.1 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider selling — $74,109 (0.000% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.0 |
| quality rank | 8.2 |
| growth rank | 5.0 |
- ▸Superior ROE vs peers
Technical
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.5 |
| support resistance | 7.3 |
| 52w position | 5.8 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.0 |
| days to cover | 1.1 |
| volatility | 0.0 |
| put call | 2.9 |
| implied vol | 2.5 |
| beta | 6.6 |
| debt equity | 7.3 |
- ▸Elevated put/call: 1.57
- ▸High IV: 65%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.7 |
| dividend safety | 4.8 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Growth is cheap relative to earnings, but the technical setup has not yet produced a breakout above resistance (PEG 0.38, quality 9.1/10, growth 10.0/10).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.5<4.5
- ASYMMETRY:-1.3=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.34
Upside
-15.4%
Downside
11.5%
Sizing output
STARTER
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeTEMP_HEADWIND — High quality (9.1) with weak momentum (2.5)
SuitabilityMODERATE — Balanced profile
Investment implication
The C-path quality+growth combination triggered the STRONG_BUY_WAIT verdict: quality 9.1 and growth 10.0 both clear their thresholds, with asymmetric R:R of -1.34 supporting the read.
The strongest dimensions are Growth at 10.0, Quality at 9.1, and Technical at 6.9; the weakest are Momentum at 2.5, Risk (lower is worse) at 3.5, and Sentiment at 4.7. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.34 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company generates a 46% return on equity with 34% net margins and a perfect Piotroski financial health score of 9/9, placing it in the top tier of all global mining companies on capital efficiency and balance sheet quality.
Trip ifReturn on equity falls below 25% or net margins drop below 20% in any reported quarter over the next 12 months.
- P2Revenue grew 36% year over year and the company beat earnings estimates in all 4 recent quarters with an average positive surprise of 6.4%, reflecting both commodity price tailwinds and operational discipline in managing production costs.
Trip ifEPS surprise falls below -10% in at least 2 of the next 4 quarters, breaking the beat streak.
- P3The current price of $193.22 is already 23.4% above the analyst consensus target on a raw basis, meaning the market has run well ahead of the fundamental valuation, leaving no margin of safety at current levels.
Trip ifStock price rises above $210, more than 8% above the current $193.22, further extending the overshot beyond analyst targets.
- P4Copper represents 75.9% of revenue and production is concentrated in Peru and Mexico, creating dual concentration risks — commodity price and geopolitical — that are elevated relative to diversified mining peers.
Trip ifCopper price declines by more than 20% over any 6-month period, reducing the commodity price contribution to revenue.