Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Southern Copper Corporation (NYSE: SCCO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 58.0% when compared to the same quarter one year prior, rising from $217.87 million to $344.22 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market, SOUTHERN COPPER CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- SCCO's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.72 is very high and demonstrates very strong liquidity.
- The gross profit margin for SOUTHERN COPPER CORP is rather high; currently it is at 51.89%. Regardless of SCCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SCCO's net profit margin of 24.86% compares favorably to the industry average.
- SCCO, with its decline in revenue, underperformed when compared the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 10.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.