Breaking Down Southern Copper Corporation (SCCO) Financial Health: Key Insights for Investors

You're looking at Southern Copper Corporation (SCCO) because you know the electrification and AI boom is copper-intensive, but you need to know if the company's financial health can sustain the massive growth pipeline. The short answer is: their operational efficiency is defintely industry-leading, but the sheer scale of their capital expenditure (CapEx) plan is the critical variable to watch. For the nine months ending September 2025, the company delivered a phenomenal performance, exemplified by a record-low Q3 operating cash cost (net of by-products) of just $0.42 per pound, a 44.7% drop from the prior year, which drove a Q3 net income of over $1.1 billion. That's a powerful margin buffer. Still, they are betting big on the future, having already spent $902.7 million on capital investments in the first nine months of 2025, which is a 14.0% increase year-over-year, all to fuel a multi-billion dollar expansion that includes projects like Tía María and Michiquillay; this heavy spend means that while the trailing twelve months (TTM) net income is strong at $3.821 billion, you need to understand the execution risk tied to that capital program before you commit new money.

Revenue Analysis

You need a clear picture of where Southern Copper Corporation (SCCO) gets its money, and the simple answer is: copper, but its by-products are the real story of 2025. The company's financial health is defintely strong, with a trailing twelve months (TTM) revenue ending September 30, 2025, reaching $12.33 billion, marking a 12.70% increase year-over-year. That's a solid, double-digit jump.

The primary revenue stream, unsurprisingly, is copper. But what's interesting is how much the other metals-what we call by-products-are doing the heavy lifting, especially in terms of margin protection. When copper prices or volumes fluctuate, the strength in molybdenum, silver, and zinc acts as a critical buffer. This is a classic mining strategy: maximize the value of everything you pull out of the ground. For a deeper dive into who is buying this production, you should check out Exploring Southern Copper Corporation (SCCO) Investor Profile: Who's Buying and Why?

Here's the quick math on the product mix based on the TTM ending June 30, 2025, which gives us the clearest look at the current contribution:

The $9.03 billion from copper is the foundation, but the combined $2.85 billion from the by-products is what drives the margin story.

The year-over-year growth rate has been anything but smooth in 2025, which shows you the volatility of the commodity market. While the TTM growth is strong, the quarterly results reveal the near-term risk. Q1 2025 net sales were $3,121.9 million, up a massive 20.1% year-over-year, largely due to higher copper prices. But then Q2 2025 net sales dipped to $3,051.0 million, a 2.2% decrease, as copper sales volume and prices softened. The story rebounded in Q3 2025 with net sales hitting $3,377.3 million, a 15.2% increase, propelled by strong volumes and prices for the by-products.

This fluctuation highlights a key trend: the growing importance of the by-product segment. Zinc, for example, saw a surge in production, with mined zinc output increasing 46% quarter-on-quarter in Q3 2025. Silver, which represented 7% of sales value in Q3 2025, is also a significant contributor. This strength in by-products is what drove the company's operating cash cost (net of by-product revenue credits) down to an impressive $0.42 per pound of copper in Q3 2025-a 44.7% decrease from the prior year.

The by-products are not just a nice-to-have; they are a core operational advantage. The company is actively focusing on increasing these volumes, expecting to produce 23 million ounces of silver in 2025, a 10% increase over 2024. This diversification away from pure copper risk is a strategic move, so watch for these key indicators:

• Copper prices stabilizing at a profitable level.
• Zinc and silver production volumes continuing to rise.
• Operating cash cost staying below $0.50 per pound.

The overall revenue picture is positive, but it's the operational efficiency, boosted by those profitable by-products, that is truly protecting the bottom line. That's the part that matters most right now.

Profitability Metrics

You need to know if Southern Copper Corporation (SCCO) is converting its massive revenue into real profit, and the answer is a resounding yes. The company's profitability margins are not just strong; they are industry-leading, reflecting exceptional cost control in a high-demand commodity environment. This is a high-margin business, defintely.

For the trailing twelve months (TTM) ending September 30, 2025, Southern Copper Corporation generated a massive $12,335 million in revenue, and its operational efficiency shines through in the core profitability ratios:

• Gross Profit Margin: 59.56%
• Operating Profit Margin: 50.25%
• Net Profit Margin: 31.07%

Gross, Operating, and Net Margins

The gross profit margin, which shows how efficiently Southern Copper Corporation produces its copper and by-products, stood at 59.56% on TTM revenue of $12,335 million and a gross profit of $7,347 million. [cite: 12 (from step 1)] This is a powerful signal of a low-cost production base. When you move down to the operating profit margin of 50.25% (Operating Income of $6,199 million), [cite: 12 (from step 1)] you see that selling, general, and administrative (SG&A) costs barely erode the gross profit, which is typical of a well-run, capital-intensive mining operation.

The final TTM net profit margin of 31.07% (Net Income of $3,833 million) [cite: 12 (from step 1)] tells you that nearly one-third of every dollar of revenue ends up as pure profit after all expenses, taxes, and interest. This is a phenomenal conversion rate. If you want a deeper look at the company's investor base, you can check out Exploring Southern Copper Corporation (SCCO) Investor Profile: Who's Buying and Why?

Operational Efficiency and Industry Comparison

Southern Copper Corporation's profitability trends are decisively positive, driven by superior cost management. The net profit margin has shown an upward trend, rising from 27.7% in the previous period to a recent 31% (or 32.8% in Q3 2025 alone), with annual earnings growth hitting 26.2%. [cite: 3, 11 (from step 1), 2 (from step 1)] The key is their cash cost per pound of copper, net of by-product credits, which dropped significantly to just $0.42 in Q3 2025. [cite: 2, 5 (from step 1)] That's an enormous competitive advantage.

To put this in perspective, let's look at a major peer, Freeport-McMoRan (FCX), based on their most recent TTM or quarterly data:

Southern Copper Corporation's margins are dramatically higher across the board. The company's TTM Operating Margin of 50.25% is nearly double that of its major competitor, Freeport-McMoRan. This gap highlights Southern Copper Corporation's low-cost operations and the substantial by-product revenue from molybdenum and zinc, which act as a credit against the cost of copper production. This is what you call a Tier-1 asset base with world-class cost control.

Debt vs. Equity Structure

You want to know how Southern Copper Corporation (SCCO) is fueling its massive capital expenditure program, and the answer is clear: they maintain a conservative, debt-centric structure, but with a recent, strategic infusion of new debt. This approach keeps their financial leverage (Debt-to-Equity ratio) at a manageable level, especially when compared to the broader capital-intensive mining sector.

As of September 2025, Southern Copper Corporation's total debt stood at approximately $7.44 billion. This debt load is heavily weighted toward the long term, which is typical for a company with multi-year mining development projects. Specifically, the company reported $7,347 million in Long-Term Debt and Capital Lease Obligations, with a minimal $85 million in Short-Term Debt and Capital Lease Obligations. That's a very clean balance sheet structure.

The company's financial leverage, measured by the Debt-to-Equity ratio, was 0.71 as of September 2025. To put that into perspective, the average Debt-to-Equity ratio for the copper industry is around 0.6035. Southern Copper Corporation is slightly more leveraged than the industry average, but still well within a healthy range for a capital-intensive business. Honestly, a ratio below 1.0 is defintely a sign of a strong balance sheet, meaning equity still funds the majority of assets.

• Debt-to-Equity (Sep 2025): 0.71
• Total Debt (Jun 2025): $7.44 Billion
• Total Stockholders Equity (Sep 2025): $10,450 Million

The company's approach to financing growth is a calculated mix of debt and retained earnings (equity). They lean on debt for large, specific capital programs, like the massive $1.8 billion Tia Maria project, but their strong operating cash flow allows them to self-fund a significant portion of their development. This balance is what keeps their credit ratings strong, which is crucial for lowering the cost of future borrowing.

Speaking of new debt, in February 2025, Southern Copper Corporation's subsidiary, Minera Mexico S.A. de C.V., strategically issued $1.0 billion in new fixed-rate senior notes. These notes mature in 2032 and carry an annual interest rate of 5.625%. The proceeds are earmarked for capital expenditures and general corporate purposes, directly supporting their growth pipeline. This move was well-received by the rating agencies, with Moody's assigning a Baa1 rating and both Fitch and Standard & Poor's assigning a 'BBB+' rating to the new notes. That's investment-grade territory, signaling low credit risk.

Here's the quick math on their recent debt structure:

The key takeaway is that Southern Copper Corporation uses debt judiciously to fund growth projects while maintaining a solid equity base, a sign of management discipline in the Metals & Mining industry. If you want to dive deeper into the ownership structure that makes this balance possible, check out Exploring Southern Copper Corporation (SCCO) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

Southern Copper Corporation (SCCO) maintains a rock-solid liquidity position, evidenced by its high current and quick ratios for the 2025 fiscal year, which provides a substantial buffer against short-term obligations. You can defintely sleep well knowing their cash generation is strong, but the massive capital expenditure plan still requires vigilant monitoring of cash flow allocation. For a deeper dive into the company's financial structure, check out Breaking Down Southern Copper Corporation (SCCO) Financial Health: Key Insights for Investors.

Current and Quick Ratios Signal Strength

The company's ability to cover its near-term debts is exceptional. The current ratio, which measures current assets against current liabilities, stood at a robust 4.52x for the trailing twelve months (TTM) ended in 2025. This means Southern Copper Corporation has over four dollars in liquid assets for every dollar of short-term debt. The quick ratio (or acid-test ratio), which excludes inventory-a less liquid asset-was also very strong at 3.91x TTM 2025. This is an ideal liquidity profile, showing the company can meet its immediate obligations without needing to sell off its copper inventory in a rush.

• A current ratio above 2.0x is generally considered healthy.
• SCCO's ratio of 4.52x is a significant liquidity cushion.

Analysis of Working Capital Trends

Southern Copper Corporation's working capital (current assets minus current liabilities) is substantial, reinforcing its operational flexibility. As of the third quarter of 2025, total current assets were around $7.67 billion, against total current liabilities of about $1.70 billion. Here's the quick math: that leaves a positive working capital of approximately $5.97 billion. This large, positive working capital is supported by a significant cash and equivalents balance, which was near $3.95 billion in Q3 2025. This cash hoard is the primary source of financial flexibility, allowing the company to fund operations and dividends without external financing pressure, even with volatile copper prices.

Cash Flow Statements Overview

The cash flow statement for Southern Copper Corporation reveals a healthy, self-funding operational core, but also signals a major investment phase. For the nine months ended September 30, 2025 (9M25), cash flow from operating activities (CFOA)-the cash generated from core business-was $3,257.8 million, a 6.4% increase over the same period in 2024. This is the engine of the company.

The cash flow breakdown shows where the money is going:

The increase in capital investments to $902.7 million in 9M25 reflects the early stages of their aggressive growth strategy. Meanwhile, net cash used in financing activities of $1,275.7 million was primarily driven by dividend payments, which speaks to a commitment to shareholder returns.

Potential Liquidity Strengths and Concerns

The primary strength is the sheer volume of operating cash flow and the resulting liquidity ratios. Southern Copper Corporation is generating enough cash to comfortably cover its capital expenditures and its substantial dividend payments. But, to be fair, the real test is still ahead. The company has a massive, multi-year $15 billion capital expenditure program planned through 2033. While 2025's cash generation is strong, executing on this large-scale investment while maintaining dividends and navigating commodity price volatility is the key near-term risk. If copper prices drop, that strong CFOA can quickly shrink, putting pressure on the company to fund its growth plan and maintain its payout. Still, the current liquidity position gives them a long runway to manage any short-term market turbulence.

Valuation Analysis

You need to know if you're buying into a premium or a bargain, and for Southern Copper Corporation (SCCO), the market is defintely pricing in a premium. The consensus from analysts is a Hold rating, suggesting the stock is currently trading near its fair value, but the key valuation multiples tell a story of high expectations for future copper demand.

As of November 2025, Southern Copper Corporation (SCCO) trades at a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio of approximately 25.67. Here's the quick math: this is significantly higher than the P/E of many major diversified mining peers, which often hover closer to the high teens. This premium valuation reflects Southern Copper Corporation (SCCO)'s industry-leading, low-cost operations and its massive growth pipeline, which you can read more about in their Mission Statement, Vision, & Core Values of Southern Copper Corporation (SCCO).

Key Valuation Multiples and Peer Comparison

When you look deeper, the elevated valuation is consistent across other metrics. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which accounts for debt, sits at about 14.39. For a capital-intensive industry like mining, this is a demanding multiple, indicating investors are willing to pay a high price for each dollar of core operating profit. Also, the Price-to-Book (P/B) ratio is high, at around 9.83.

This high P/B ratio is a clear signal that the market values the company far beyond the net value of its physical assets on the balance sheet. It's a bet on their long-term copper reserves and their ability to execute on projects like Tía María and Michiquillay.

• P/E Ratio (TTM): 25.67
• P/B Ratio (TTM): 9.83
• EV/EBITDA (TTM): 14.39

Stock Performance and Analyst Outlook

The stock price trend over the last 12 months confirms this bullish sentiment, but also shows volatility. Southern Copper Corporation (SCCO) has seen a dramatic climb, moving from a 52-week low of about $74.84 to a 52-week high of $143.59 in October 2025. The stock has increased by over 33.91% in 2025 alone, reflecting the global optimism surrounding copper as a critical metal for the energy transition and AI infrastructure.

However, the Street's view is cautious. The average 12-month price target from the collective analyst community is approximately $117.94, which is actually below the recent trading price of around $125.87. This suggests that while the stock has performed well, many analysts believe the current price has already factored in much of the near-term good news. The consensus rating is a Hold, with a split of ratings across the board.

Dividend Stability and Payout

Southern Copper Corporation (SCCO) is also a solid dividend payer. The company has an annualized dividend of about $3.60 per share, which translates to a dividend yield of roughly 2.9%. The dividend payout ratio is manageable at approximately 65.48% of earnings. This payout ratio is healthy for a mining company, showing they are returning a good portion of their profits to shareholders while still retaining enough capital for their major expansion projects. They are not over-extending themselves on the dividend front, which is a good sign for long-term stability.

The high valuation multiples and the fact that the stock is trading above the average analyst price target means you should approach Southern Copper Corporation (SCCO) with realism. The opportunity is in the long-term copper narrative, but the near-term risk is that the stock is priced for perfection.

Risk Factors

You're looking at Southern Copper Corporation (SCCO) because of its low-cost production and massive reserve base, but you need to be a trend-aware realist about the headwinds. The biggest risks for SCCO in the 2025 fiscal year aren't just about copper prices; they're a complex mix of geopolitical friction, operational execution, and regulatory uncertainty. Honestly, flawless execution is already priced into the stock.

The company's risk profile, based on recent filings, shows that Production and Macro & Political factors each account for approximately 23% to 29% of the total disclosed risks. That's a huge concentration in areas where management has less direct control. You must watch these two categories closely. Here's the quick math: a major political disruption in Peru or a sustained drop in the copper price from the Q1 2025 average of $4.24 per pound could easily wipe out the gains from their operational efficiency.

External and Geopolitical Risks

The external risks are significant and near-term. First, market volatility remains a core threat because SCCO's performance is heavily dependent on metal prices. Second, the geopolitical landscape, especially the intense commercial war between the U.S. and China, is expected to indirectly affect global copper demand. The most concrete risk is the potential for U.S. tariff policy changes, such as the 50% tariff on semi-finished copper products that became effective in August 2025, which has already caused sharp market reactions and a drop in U.S. copper prices.

Plus, operating in Peru and Mexico means SCCO is constantly navigating evolving political landscapes and community relations issues. These aren't just minor headaches; they can delay or even halt major expansion projects like Tia Maria, Los Chancas, and Michiquillay, which are crucial for the company's long-term growth.

• Copper price swings directly hit revenue.
• New U.S. tariffs create immediate market disruption.
• Political instability in operating countries stalls growth projects.

Operational and Financial Headwinds

On the operational side, there are two key challenges. The first is the decline in ore grades, which is an internal risk. This led to a 6.9% year-over-year decrease in copper mine production during the third quarter of 2025. That's a real operational drag, and it makes the company's low cash cost position harder to maintain. The second is the massive capital expenditure (CapEx) program, exceeding $15 billion over the decade, which introduces significant execution risk.

To be fair, the company is fighting back hard on costs. Their operating cash cost per pound of copper, net of by-product credits, was reduced to an industry-leading $0.42 in Q3 2025, a massive 44.7% decrease from Q3 2024. This is a testament to their cost control and the strategic value of by-products-zinc production, for example, surged 46.3% in Q3 2025.

Here's a snapshot of the operational and financial risks versus mitigation efforts:

The mitigation strategies are clear: SCCO is using its massive scale and financial strength (Q3 2025 Net Income was $1,107.6 million) to invest its way out of the production issues and hedge against commodity price drops with a conservative long-term price of $3.30 per pound in their planning. They are defintely prioritizing resilience over short-term optimization. If you want a deeper dive into the company's overall financial picture, you can read more here: Breaking Down Southern Copper Corporation (SCCO) Financial Health: Key Insights for Investors.

Next Step: Portfolio Manager: Model the impact of a sustained $3.80 copper price (a 10% drop from the Q1 2025 average) combined with a 10% delay in the Tia Maria project CapEx, which is planned at less than $200 million for 2025.

Growth Opportunities

You're looking past the current market noise to see where Southern Copper Corporation (SCCO) is actually building its future, and honestly, the picture is one of disciplined, long-term expansion fueled by a unique cost advantage. The company's growth story for 2025 isn't about a massive revenue jump this year, but about solidifying its position as a low-cost producer while executing on a massive capital program that will pay off for decades.

The near-term growth is driven less by a single product innovation and more by product diversification and operational efficiency. Specifically, the full-capacity operation of the Buenavista zinc concentrator is a key driver, projected to boost zinc production by a significant 31% in 2025, which adds a strong, immediate lift to overall revenue and margin expansion. This is a smart move to capitalize on the non-copper portfolio.

Here's the quick math on what analysts are projecting for the 2025 fiscal year:

What this estimate hides is the strategic foundation being laid. Southern Copper Corporation has committed over $15 billion in capital investments across Mexico and Peru, setting the stage for material production gains starting in the next few years. You can read more about their philosophy in their Mission Statement, Vision, & Core Values of Southern Copper Corporation (SCCO).

Competitive Edge and Strategic Initiatives

Southern Copper Corporation's primary competitive advantage is its cost structure. The company benefits from large, high-grade copper reserves and vertically integrated operations, which translate into some of the lowest cash costs among major copper producers. In fact, the cash cost of copper production is projected to be between just $0.75 and $0.80 per pound by 2025, a figure that is defintely a substantial buffer against copper price volatility. This low-cost profile allows them to maintain profitability even when copper prices dip, which is a huge advantage in a cyclical commodity market.

The long-term growth is tied directly to their project pipeline, which is massive and designed to meet the rising global demand for copper, driven by electrification, renewable energy, and data centers. The market expects a copper deficit in 2025, and SCCO is positioning itself to fill that gap. The strategic initiatives are clear:

• Execute on major projects like Tía María in Peru, which is expected to add 120,000 tons of copper capacity, with a $1.8 billion investment, targeting 2027.
• Advance the El Arco project in Mexico, a world-class repository with a $2.9 billion investment and 190,000 tons of copper capacity, targeting 2030.
• Develop Michiquillay in Peru, which is slated to add 225,000 tons of copper capacity, backed by a $2.5 billion investment, targeting 2032.

These projects, while not contributing to 2025 production, underscore a long-term strategy to increase annual copper output by a total of 545,000 tons by 2032, making the stock a compelling long-term hold for those who believe in the global energy transition. The biggest risk here is not the demand, but the political and regulatory hurdles inherent in operating in Peru and Mexico, which could delay these timelines.