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Can Southern Copper Sustain Its Strong Operating Cash Flow Growth?
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Key Takeaways
Southern Copper's operating cash flow jumped 116.9% to $3.68 billion in the first six months of 2026.
SCCO expects copper production to reach 917,000 tons in 2026 despite a 3.8% H1 decline.
Rising metal prices and ongoing cost controls position Southern Copper for further cash flow gains.
Southern Copper Corporation (SCCO - Free Report) delivered a solid 116.9% year-over-year surge in the operating cash flow in the first six months of 2026 to $3.68 billion. Southern Copper’s strong cash generation is driven by higher sales and a $718.5-million reduction in operating assets and liabilities requirements.
The company also benefited from its cash cost decrease, which was driven by a 68.2% year-over-year rise in by-product revenue credits. Cash and cash equivalents stood at $5.67 billion as of June 30, 2026, while capital investments totaled $864.7 million.
Over the past few years, Southern Copper has successfully lowered its debt levels. Long-term debt was $7.99 billion at the end of June 30, 2026, following the issuance of $1.25 billion of 10-year senior unsecured notes carrying a 5.35% interest rate. The proceeds are intended primarily to support the Tía María project and other capital needs of the company’s Peruvian operations.
In July 2026, the board authorized a $1.10-per-share cash dividend plus a stock dividend of 0.012 shares per common share, reflecting continued capital returns alongside higher investment spending.
The company’s copper production declined 3.8% year over year to 461,206 tons in the first half of 2026 due to a decrease in production at the company’s Peruvian operations. Despite the year-to-date fall in production, the company has slightly hiked its 2026 copper production outlook to 917,000 tons from the initially stated 910,000 tons.
The figure still implies a 5% year-over-year decline. Nonetheless, Southern Copper maintains a strong long-term outlook with production expected to increase to 1.6 million tons by 2033 or 2034.
Moreover, copper prices are currently near $6.6 per pound, up 47% in a year, supported by tight global supply and strong demand. Along with SCCO, its peers Teck Resources Ltd (TECK - Free Report) and Freeport-McMoRan Inc. (FCX - Free Report) are gaining from this rise in copper prices. Higher prices for molybdenum, zinc and silver will also aid growth.
The rally in metal prices this year and its ongoing cost control efforts position the company for further cash flow gains in the months ahead.
Southern Copper Peers’ Cash Flow Performance
Teck Resources’ cash flow from operating activities improved to C$2.74 billion ($1.98 billion) in the first half of 20206 from a cash outflow of C$427 million ($309 million). Teck Resources ended the second quarter 2026 with C$6.05 billion ($4.38 billion) in cash and cash equivalents, and liquidity of C$10.3 billion ($7.5 billion).
Teck Resources’ copper segment’s revenues surged 85% year over year, driven by higher copper prices and sales volumes. This pushed the company’s top line to $2.6 billion, marking a 78% year-over-year rise.
Freeport-McMoRan’s cash flow from operations increased to $3.68 billion in the first half from $1.69 billion in the prior year. Freeport-McMoRan ended the second quarter with strong liquidity, including $4.1 billion in cash and cash equivalents, $3 billion in availability under the Freeport revolving credit facility, and $1.5 billion in availability under the PT-FI credit facility.
However, revenues declined 7.3% year over year to $7.03 billion in the second quarter of 2026. Freeport-McMoRan’s copper production fell 18.4% year over year to 786 million pounds in the reported quarter.
SCCO’s Price Performance, Valuations & Estimates
Southern Copper shares have gained 40.7% year to date compared with the Zacks Mining - Non Ferrous industry’s rise of 28.9%. During this time, the Basic Materials sector has risen 22.1% and the S&P 500 has rallied 13.2%.
Image Source: Zacks Investment Research
The Southern Copper stock is currently trading at a forward 12-month earnings multiple of 27.80X, which is a premium to the industry average of 23.62X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Southern Copper’s 2026 sales is $16.86 billion, indicating a 25.6% year-over-year jump. The consensus mark for the year’s earnings is pegged at $7.59 per share, suggesting a rally of 44.8%.
The Zacks Consensus Estimate for 2027 sales implies an 11.7% year-over-year dip. The same for earnings suggests a fall of 8.5%.
Earnings estimates for 2026 have moved 0.4% south over the past 60 days, while the same for 2027 have moved down 0.1% over the past 60 days.
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Can Southern Copper Sustain Its Strong Operating Cash Flow Growth?
Key Takeaways
Southern Copper Corporation (SCCO - Free Report) delivered a solid 116.9% year-over-year surge in the operating cash flow in the first six months of 2026 to $3.68 billion. Southern Copper’s strong cash generation is driven by higher sales and a $718.5-million reduction in operating assets and liabilities requirements.
The company also benefited from its cash cost decrease, which was driven by a 68.2% year-over-year rise in by-product revenue credits. Cash and cash equivalents stood at $5.67 billion as of June 30, 2026, while capital investments totaled $864.7 million.
Over the past few years, Southern Copper has successfully lowered its debt levels. Long-term debt was $7.99 billion at the end of June 30, 2026, following the issuance of $1.25 billion of 10-year senior unsecured notes carrying a 5.35% interest rate. The proceeds are intended primarily to support the Tía María project and other capital needs of the company’s Peruvian operations.
In July 2026, the board authorized a $1.10-per-share cash dividend plus a stock dividend of 0.012 shares per common share, reflecting continued capital returns alongside higher investment spending.
The company’s copper production declined 3.8% year over year to 461,206 tons in the first half of 2026 due to a decrease in production at the company’s Peruvian operations. Despite the year-to-date fall in production, the company has slightly hiked its 2026 copper production outlook to 917,000 tons from the initially stated 910,000 tons.
The figure still implies a 5% year-over-year decline. Nonetheless, Southern Copper maintains a strong long-term outlook with production expected to increase to 1.6 million tons by 2033 or 2034.
Moreover, copper prices are currently near $6.6 per pound, up 47% in a year, supported by tight global supply and strong demand. Along with SCCO, its peers Teck Resources Ltd (TECK - Free Report) and Freeport-McMoRan Inc. (FCX - Free Report) are gaining from this rise in copper prices. Higher prices for molybdenum, zinc and silver will also aid growth.
The rally in metal prices this year and its ongoing cost control efforts position the company for further cash flow gains in the months ahead.
Southern Copper Peers’ Cash Flow Performance
Teck Resources’ cash flow from operating activities improved to C$2.74 billion ($1.98 billion) in the first half of 20206 from a cash outflow of C$427 million ($309 million). Teck Resources ended the second quarter 2026 with C$6.05 billion ($4.38 billion) in cash and cash equivalents, and liquidity of C$10.3 billion ($7.5 billion).
Teck Resources’ copper segment’s revenues surged 85% year over year, driven by higher copper prices and sales volumes. This pushed the company’s top line to $2.6 billion, marking a 78% year-over-year rise.
Freeport-McMoRan’s cash flow from operations increased to $3.68 billion in the first half from $1.69 billion in the prior year. Freeport-McMoRan ended the second quarter with strong liquidity, including $4.1 billion in cash and cash equivalents, $3 billion in availability under the Freeport revolving credit facility, and $1.5 billion in availability under the PT-FI credit facility.
However, revenues declined 7.3% year over year to $7.03 billion in the second quarter of 2026. Freeport-McMoRan’s copper production fell 18.4% year over year to 786 million pounds in the reported quarter.
SCCO’s Price Performance, Valuations & Estimates
Southern Copper shares have gained 40.7% year to date compared with the Zacks Mining - Non Ferrous industry’s rise of 28.9%. During this time, the Basic Materials sector has risen 22.1% and the S&P 500 has rallied 13.2%.
The Southern Copper stock is currently trading at a forward 12-month earnings multiple of 27.80X, which is a premium to the industry average of 23.62X.
The Zacks Consensus Estimate for Southern Copper’s 2026 sales is $16.86 billion, indicating a 25.6% year-over-year jump. The consensus mark for the year’s earnings is pegged at $7.59 per share, suggesting a rally of 44.8%.
The Zacks Consensus Estimate for 2027 sales implies an 11.7% year-over-year dip. The same for earnings suggests a fall of 8.5%.
Earnings estimates for 2026 have moved 0.4% south over the past 60 days, while the same for 2027 have moved down 0.1% over the past 60 days.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.