Why Southern Copper (SCCO) Stock Is Higher This Morning

NEW YORK (TheStreet) -- Shares of Southern Copper Corp. (SCCO) are up 1.50% to $33.20 in pre-market trading on Monday following a ratings upgrade to "outperform" from "market perform" at BMO Capital.

The firm said it raised its rating on the integrated copper producer based on its belief the company's near term outlook has improved.

BMO increased its price target on the stock to $40 from $30.

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Separately, TheStreet Ratings team rates SOUTHERN COPPER CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOUTHERN COPPER CORP (SCCO) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • SCCO's debt-to-equity ratio of 0.74 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 2.76 is very high and demonstrates very strong liquidity.
  • The gross profit margin for SOUTHERN COPPER CORP is rather high; currently it is at 52.61%. 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 23.87% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 34.7% when compared to the same quarter one year ago, falling from $495.39 million to $323.39 million.
  • Net operating cash flow has decreased to $334.76 million or 43.68% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SOUTHERN COPPER CORP has marginally lower results.
  • You can view the full analysis from the report here: SCCO Ratings Report
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