Investment Thesis
Southern Copper demonstrates exceptional fundamental strength with 37% net margins, $1.3B free cash flow generation, and conservative 0.57x leverage. Revenue growth of 17.4% coupled with outstanding 4.38x liquidity and $4.9B cash position provides substantial financial flexibility. Primary concern is net income flatness despite revenue growth, indicating margin compression that warrants monitoring in commodity price cycles.
Strengths
- Outstanding profitability with 37.1% net margin and 58.3% operating margin
- Strong free cash flow generation ($1.3B) with 29.5% FCF margin indicates quality earnings
- Conservative balance sheet with 0.57x debt-to-equity and $4.9B cash providing strategic flexibility
- Robust liquidity with 4.38x current ratio and 3.89x quick ratio
- Revenue growth of 17.4% YoY shows market demand strength
Risks
- Net income essentially flat (-0.3% YoY) despite 17.4% revenue growth suggests margin compression
- Commodity mining cyclicality exposes earnings to copper and molybdenum price volatility
- Capital intensity requiring $441.9M annual capex limits flexibility during downturns
- $6.8B long-term debt obligations despite low leverage ratios
- EPS growth (24.5%) driven by share buybacks rather than operational improvement
Key Metrics to Watch
- Operating margin trend and cost structure stability amid commodity price cycles
- Free cash flow sustainability and capital allocation decisions
- Debt levels and leverage ratios if copper prices decline materially
Financial Metrics
Revenue
4.3B
Net Income
1.6B
EPS (Diluted)
$1.92
Free Cash Flow
1.3B
Total Assets
21.9B
Cash
4.9B
Profitability Ratios
Gross Margin
68.6%
Operating Margin
58.3%
Net Margin
37.1%
ROE
13.4%
ROA
7.2%
FCF Margin
29.5%
Balance Sheet & Liquidity
Current Ratio
4.38x
Quick Ratio
3.89x
Debt/Equity
0.57x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
6.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T12:12:07.668261 |
Data as of: 2026-03-31 |
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