This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
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Stock Up Since Last Profile
when I take a quick look back at the chart, I see that SCCO is up about 4.75% since it was last profiled as the Bear of the Day. In that same time frame, the market (S&P 500) has been up 6%. So now quite the negative performance you might expect but it has underperformed.
Southern Copper is in the business of mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile.
The last two quarters have not been that good for SCCO. The March 2013 quarter was a miss of three cents of 4.8% below earnings expectations. The follow quarter was another miss of $0.03, but since the estimates were lower the percentage of negative surprise rose to 6.4%.
More importantly, the company has missed on the top line in each of the last three quarters. The most recent quarter reported on 7/22/13 had a top line miss of $112M which translates to a negative sales surprise of 7.4%. Investors do not want to see negative sales growth from companies as it will force management to cut costs deeper and deeper. This can lead to lower margins and lower earnings.
In March the Zacks Consensus Estimate for 2013 was calling for $2.63. Since that time, the estimates have continued to decline. A move to $2.04 in June was followed up by a move to $1.92 in September. Clearly estimates are trending in the wrong direction.
2014 doesn't look any better, with the Zacks Consensus Estimate moving from $2.73 to $2.15 to $1.86 over the same time horizon as mentioned above.
The price and consensus chart for SCCO shows how lower earnings estimates over time will lead to a lower stock price. While the price seems to have stabilized, the earnings picture has not and despite short term improvements in stock price, investors would want to see estimates move higher before they want to buy this stock.
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.
Brian is also the editor of Breakout Growth Trader a trading service that focuses on small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.
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