Southern Copper Shines with Q3 Earnings Beat on Strong Metals Demand
Southern Copper Corporation SCCO reported earnings of $1.15 per share for the third quarter of 2024, surpassing the Zacks Consensus Estimate of $1.12. This represents a remarkable 46% increase compared to the same period last year, a rise fueled by higher sales volumes for copper, molybdenum, silver, and zinc, along with increased pricing for most metals (excluding molybdenum). The company’s rigorous cost control measures also played a crucial role in enhancing their earnings.
Net sales reached $2.9 billion, reflecting a 17% increase from the previous year, but slightly fell short of the consensus forecast of $2.94 billion.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Sales Volumes and Margins Experience Year-Over-Year Growth
Southern Copper witnessed a significant 50.1% rise in zinc sales volumes from the previous year. Molybdenum volumes increased by 5.7%, silver sales improved by 19%, and copper sales volumes saw a 7.7% uptick. The combined effect of these higher sales volumes and rising prices—copper at 10%, zinc at 14.5%, and silver at 24.7%—contributed to overall sales growth, while molybdenum prices dipped by 8%.
The cost of sales rose by 4% year-over-year to $1.22 billion, with total operating costs increasing by 3% to $1.48 billion.
Performance Metrics Reflect Strong Operations
SCCO’s operating profit was $1.45 billion, an increase of 36% from last year, resulting in an operating margin of 49.5%, up from 42.7% a year ago. Adjusted EBITDA also saw substantial growth, climbing 30.5% to $1.68 billion, leading to an adjusted EBITDA margin of 57.5%, a 600-basis point improvement from the previous year.
Production Details for Q3
Copper: The company mined 252,219 tons of copper, reflecting an 11.5% increase year-over-year, driven by enhanced output from its open pit operations. Copper sales rose 7.7% to 242,028 tons.
Molybdenum: Mined molybdenum increased to 7,271 tons, up 6% compared to last year, with sales rising 5.7% to 7,327 tons due to better performance at the Cuajone, Toquepala, and Buenavista mines.
Zinc: Zinc production soared 91% year-over-year to 31,078 tons, largely because of output from the new Buenavista zinc concentrator. Sales rose 50% to 37,355 tons.
Silver: Silver production jumped 21.5% to 5.34 million ounces, with sales climbing 19% to 5.26 million ounces, benefiting from growth across most operations, excluding the La Caridad mine.
Financial Health: Cash Flow and Balances
Southern Copper reported net cash from operations at approximately $1.44 billion, an increase from $1.05 billion in the same quarter last year. Cash and cash equivalents reached $2.65 billion, up significantly from $1.15 billion at the end of 2023. Long-term debt stood at $5.76 billion as of September 30, 2024, a decrease from $6.25 billion at the end of 2023.
The company’s capital investments totaled $792 million for the first nine months of 2024, reflecting a 5.2% increase compared to last year’s expenditures for the same period.
Stock Performance Overview
In the past year, Southern Copper shares have surged by 61.4%, outperforming the 48% growth seen in the broader industry.
Comparative Earnings: A Look at Peers
Freeport-McMoRan Inc. FCX reported third-quarter profits of $526 million, or 36 cents per share, marking a 16% increase from $454 million, or 31 cents, in the previous year. However, adjusted earnings per share of 38 cents fell short of the Zacks consensus estimate of 40 cents.
Freeport-McMoRan’s revenues rose around 17% year-over-year to $6,790 million, exceeding the consensus estimate of $6,459.6 million, driven by higher copper and gold prices.
Zacks Rank and Notable Picks
Southern Copper holds a Zacks Rank #3 (Hold). Among better-ranked stocks in the Basic Materials sector are IAMGOLD Corporation IAG and DuPont de Nemours, Inc. DD, both carrying a Zacks Rank #2 (Buy). For further details on stocks with strong potential, check the complete list here.
IAMGOLD is expected to release third-quarter results on November 7, with earnings estimates at 11 cents per share, indicating a recovery from a loss of 1 cent per share from the previous year. Their stock has seen a staggering 139% increase over the past year.
DuPont’s third-quarter earnings report is slated for November 5, with an estimated earnings projection of $1.03 per share, suggesting a 12% year-over-year growth. DuPont has consistently beaten earnings estimates, evidenced by an average surprise of 11.9%, and has enjoyed a 16% rise in stock value over the last year.
Investing Insight: Top Stock Picks
Zacks analysts have identified five stocks poised to potentially double in value in 2024. These selections are based on previous successful recommendations that achieved returns of +143.0%, +175.9%, +498.3%, and +673.0%.
Many of these stocks are currently flying under Wall Street’s radar, presenting an excellent opportunity for early investment.
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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
DuPont de Nemours, Inc. (DD) : Free Stock Analysis Report
Southern Copper Corporation (SCCO) : Free Stock Analysis Report
IAMGOLD Corporation (IAG) : Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
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