Southern Copper Corporation SCCO is likely to register a year-over-year decline in earnings in its first-quarter 2024 results next week. While improved production levels are likely to have contributed to gains, the impacts of lower metal prices and increased costs are expected to have exerted downward pressure on the company's performance.

Q4 Results

In the last reported quarter, the company's earnings and sales declined year over year. The top and bottom lines missed the Zacks Consensus Estimate.

Over the past four quarters, SCCO surpassed earnings estimates in two quarters and missed in the other two, resulting in a negative average surprise of 5.57%.

Southern Copper Corporation Price and EPS Surprise

Southern Copper Corporation price-eps-surprise | Southern Copper Corporation Quote

Q1 Estimates

The Zacks Consensus Estimate for SCCO’s first-quarter 2024 earnings per share is pegged at 78 cents, indicating a decline of 26% from the year-ago quarter's reported figure. The estimate has moved down 9% over the past 30 days. The consensus mark for the quarter's revenues is $2.49 billion, suggesting a year-over-year decline of 11%.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Southern Copper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.

Earnings ESP: The Earnings ESP for Southern Copper is 0.00%. You can uncover the best stocks before they're reported with our Earnings ESP Filter.

Zacks Rank: Southern Copper currently carries a Zacks Rank of 3.

Key Factors

Copper accounts for more than 80% of the company's sales. Southern Copper expects to produce 935,900 tons of copper for the full year, which projects a 2.7% year-over-year improvement. In 2023, the Pilares project operated at full capacity and the company also initiated a ramp-up at the Buenavista zinc concentrator. These two projects are expected to contribute 44,000 tons of copper to the total copper production for the full year.

Zinc output is expected to be 117,800 tons in 2024, which factors in a 79.8% surge year over year. This growth will be driven by the startup of the Buenavista zinc concentrator, which is expected to contribute 54,400 tons of zinc. Silver production for 2024 is likely to be around 20.7 million ounces of silver, 12.2% higher than 2023. A portion of this increase is expected to have reflected in the company’s first-quarter 2024 production numbers.



Copper prices have been under pressure through the first quarter due to the contraction in the manufacturing sector and the slump in the property sector in China. However, there was a spike in prices toward the end of the quarter as China’s top copper smelters jointly agreed to cut down production at unprofitable plants due to raw material shortages.  Overall, copper prices were down year over year in the first quarter.

Silver and zinc prices have also been impacted by weak demand in China and the ongoing weakness in the industrial sector. Despite rising in the later part of the quarter on the back of a pickup on signs of expansion in the manufacturing sector, prices were down compared with the first quarter of 2023.

SCCO has also been facing higher costs for diesel and fuel, operating and repair materials, supplies, and energy, as well as increased labor costs.

Overall, improved production levels are likely to have been offset by lower copper, silver and zinc prices, as well as elevated costs, which are expected to have impacted the company’s earnings in the to-be-reported quarter. Savings from the company's stringent cost-control measures are likely to have negated some of the impacts.

Share Price Performance

The company's shares have gained 41.2% over the past year compared with the industry's 26.8% growth. Zacks Investment Research

Image Source: Zacks Investment Research

Stocks to Consider

Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Apr 25, presently has an Earnings ESP of +5.02% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AEM’s earnings for the first quarter is currently pegged at 55 cents per share.

Dow Inc. DOW, slated to release earnings on Apr 25, has an Earnings ESP of +2.28% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for DOW’s first-quarter earnings is currently pegged at 47 cents per share.

Nucor Corporation NUE, scheduled to release first-quarter earnings on Apr 22, currently has an Earnings ESP of +0.14% and a Zacks Rank of 3.

The Zacks Consensus Estimate for NUE's earnings for the first quarter is pegged at $3.64 per share.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Nucor Corporation (NUE):Free Stock Analysis Report

Dow Inc. (DOW):Free Stock Analysis Report

Agnico Eagle Mines Limited (AEM):Free Stock Analysis Report

Southern Copper Corporation (SCCO):Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research