Southern Copper Corporation SCCO shares have gained 40.9% year to date compared with the Zacks Mining – Non Ferrous industry’s rise of 25%. During this time, the Basic Materials sector has risen 18.1% and the S&P 500 has rallied 14%. The upside is fueled by SCCO’s strong first six-month results and an upward trend in copper prices despite lower production volumes. 

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Copper prices are currently near $6.6 per pound, up 48.2% in a year, supported by tight global supply and strong demand. Imports to the United States have surged, ahead of an expected decision by the Trump administration on copper import tariffs. Global copper inventories have declined as shipments to China have risen to ease a domestic supply shortage. Along with SCCO, its peers Teck Resources Ltd TECK and Freeport-McMoRan Inc. FCX are gaining from this rise in copper prices. Southern Copper has performed slightly better than Teck Resources and Freeport, which have gained 40.1% and 39.8%, respectively, so far this year. 

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Let us take a closer look at Southern Copper’s fundamentals to assess if this is the right time to buy its shares.

SCCO Posts Strong H1 Results Amid Lower Output

Record second-quarter revenues of $4.29 billion pushed the company’s six-month top-line to $8.54 billion, marking a 38.4% year-over-year increase. The upside was driven by higher prices for copper, molybdenum, zinc and silver. Driven by a record-high adjusted EBITDA of $2.86 billion in the second quarter, Southern Copper's adjusted EBITDA for the first half of 2026 increased 57.5% year over year to $5.57 billion. The adjusted EBITDA margin expanded to 65.2% in the first six months of 2026 from last year’s 57.3%, reflecting stronger realized prices and disciplined cost management.Net income attributable to SCCO also surged 71.6% year over year to a record $1.67 billion in the second quarter. The net income margin improved to 38.9% from 31.9% in the year-ago period. In the first six months, net income was 69.2% higher, driven by higher revenues.However, SCCO’s total copper production decreased 3.8% in the first half of 2026 to 461,206 tons due to a decrease in production at the company’s Peruvian operations. While mined silver production increased 3.3%, zinc and molybdenum production fell 6.9% and 6.7%, respectively, in the same time frame. Despite the year-to-date fall in production, the company has slightly hiked its 2026 copper production outlook to 917,000 tons from the initially stated 910,000 tons. The figure, however, still implies a 5% year-over-year decline. The downside will be driven by lower ore grades at the Cuajone and Peruvian mines. Molybdenum production is projected at 27,900 tons, a 7% increase from its previous target, indicating a 10% decline from the 2025 level. Silver output is projected at 24 million ounces, a decrease of 1% from 2025. Zinc production for the year is projected at 163,900 tons, 7% lower than the 2025 level.  

Southern Copper’s Solid Balance Sheet

For the first six months of 2026, SCCO’s operating cash flow increased 116.9% to $3.68 billion, supported by stronger earnings and lower operating working capital requirements. Cash and cash equivalents stood at $5.67 billion as of June 30, 2026, while short-term investments totaled $1.66 billion. Over the past few years, Southern Copper has successfully lowered its debt levels. Long-term debt was $7.99 billion at the end of June 30, 2026, following the issuance of $1.25 billion of 10-year senior unsecured notes carrying a 5.35% interest rate. The proceeds are intended primarily to support the Tía María project and other capital needs of the company’s Peruvian operations.

SCCO’s Long-term Growth Remains Solid

Southern Copper has the largest copper reserves in the industry and operates high-quality, world-class assets in investment-grade countries, such as Mexico and Peru. Backed by its constant commitment to increasing low-cost production and growth investments, the company is well-poised to continue delivering enhanced performance. Despite these near-term headwinds, Southern Copper maintains a strong long-term outlook, targeting a significant ramp-up in output to 1.6 million tons by 2035. This implies a compound annual growth rate (CAGR) of 5.3% from the 2025 reported levels. To support this growth plan, the company intends to invest $20.5 billion over the next decade, with the bulk of the capital allocated to projects in Peru. A substantial portion of this spending is scheduled through 2031 as key development projects progress. Production is expected to increase to 1.15 million tons by 2031, 1.476 million tons in 2032 and continue rising steadily to reach the above-mentioned 1.6-million-ton target by 2035. This trajectory highlights SCCO’s confidence in its robust and diversified project pipeline spanning Peru and Mexico. Key growth catalysts include the Tía María, Los Chancas and Michiquillay projects in Peru, along with El Pilar and El Arco in Mexico, all of which underpin SCCO’s long-term expansion pipeline.

SCCO’s Estimates Indicate Y/Y Rise

The Zacks Consensus Estimate for Southern Copper’s 2026 sales is $16.86 billion, indicating a 25.6% year-over-year jump. The consensus mark for the year’s earnings is pegged at $7.63 per share, suggesting a rally of 45.6%.The Zacks Consensus Estimate for 2027 sales implies an 8.6% year-over-year dip. The same for earnings suggests a fall of 11.7%.EPS estimates for 2026 have moved 5.2% north over the past 60 days, while the same for 2027 has moved up 7% over the past 60 days.

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Southern Copper’s Premium Valuation

The Southern Copper stock is currently trading at a forward 12-month earnings multiple of 27.60X, which is a premium to the industry average of 23.39X.

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Meanwhile, Teck Resources and Freeport are trading higher at 21.51X and 21.22X, respectively.

Final Take on SCCO Stock

Southern Copper has delivered a strong year-to-date stock performance and reported first-half results, supported by higher metal prices and increased revenues. Positive revisions to earnings estimates and favorable copper prices further support the stock. However, near-term production headwinds and a premium valuation remain concerning.Existing shareholders should stay invested in the SCCO stock to benefit from its solid long-term growth prospects. The company currently has a Zacks Rank #3 (Hold), which supports our thesis.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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