Saturday, March 5, 2011

Southern Copper Corporation Stock Analysis

Southern Copper Corporation (SCCO) is a large mining/producer of precious metals such as silver, gold, copper, etc.. and do a lot of business in Peru and Mexico (where large reserves are).  I wanted to keep this in line with the silver/oil/food discussion I spoke about earlier.  Analysis is as follows:

P/E Ratio: SCCO's Price currently is at $42.05 with earnings per share (EPS) at $1.83.  Therefore, the P/E stands at 22.98; higher than the S&P 500 average.  When comparing this to their industry of involvement (Basic Materials) on MorningStar, they are above the average of 17.  Therefore, it isn't as attractive in these terms.  However, there has been a declination in overall ounces of silver and the price of the metal has sky rocketed.  I am mixed on these stats.  Also to note - Morningstar shows the forward P/E is 12...

Potential Appreciation: SCCO's 52week high stands at $50.35, giving it a potential of ((50.35-42.05)/42.05) = 19.7% appreciation.  This has a lot of upside given its recent history.   Pair that with the increase of value of an ounce of silver, I can see this going above those marks.  **Note: past performance is not an indication of future performance

Dividend Yield & Payout: They pay 4 dividend payments per year.  Based on the last four, totaling 1.83, their yield is 4.35%.  This is much higher than the average of the market and provides a good incentive/attractiveness to potential and current investors.  Their current payout ratio: $1.83/1.83 = 100%.  This is how much they pay in dividends over how much they earn per share.  This is obviously extremely high and causes caution to investors.  Their last increase from 43 cents to 58 cents marks a 34% dividend increase.

Conclusion: I do like silver.  I have done a lot of research on the metal and it shows the declination of amount of silver that we have in stock today.  Silver value is increasing at an tremendous rate and I like to see what companies are in the trenches to mine this stuff out.  I like their yield and dividend payments, along with the industry they are in, but I will have to see what their next earnings release shows for the EPS; morningstar shows a forward P/E of 12.  Any thoughts on Silver/Oil/Food?  What companies do you like as we battle through this volatile market?  Please comment or message!

-Lanny B.

Disclosure: I do not recommend anything, please consult your own research. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Picture Location:

No comments:

Post a Comment