Critical Analysis: Southern Copper (SCCO) and Nexa Resources (NEXA)
Southern Copper (NYSE: SCCO) and Nexa Resources (NYSE:NEXA) are both basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.
This is a breakdown of current recommendations and price targets for Southern Copper and Nexa Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
This table compares Southern Copper and Nexa Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Southern Copper and Nexa Resources’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Southern Copper||$6.65 billion||6.19||$728.50 million||$1.00||53.27|
|Nexa Resources||$2.45 billion||0.82||$126.88 million||$1.42||12.56|
Southern Copper has higher revenue and earnings than Nexa Resources. Nexa Resources is trading at a lower price-to-earnings ratio than Southern Copper, indicating that it is currently the more affordable of the two stocks.
Southern Copper pays an annual dividend of $1.20 per share and has a dividend yield of 2.3%. Nexa Resources pays an annual dividend of $0.47 per share and has a dividend yield of 2.6%. Southern Copper pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nexa Resources pays out 33.1% of its earnings in the form of a dividend. Nexa Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
7.1% of Southern Copper shares are held by institutional investors. Comparatively, 17.4% of Nexa Resources shares are held by institutional investors. 0.5% of Southern Copper shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Southern Copper beats Nexa Resources on 8 of the 15 factors compared between the two stocks.
Southern Copper Company Profile
Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Chile, and Ecuador. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc and lead. It operates the Toquepala and Cuajone open-pit mines, and a smelter and refinery in Peru; and La Caridad, an open-pit copper mine, as well as a copper ore concentrator, a SX-EW plant, a smelter, refinery, and a rod plant. The company also operates Buenavista, an open-pit copper mine, as well as two copper concentrators and three SX-EW plants in Mexico. In addition, it operates five underground mines that produce zinc, lead, copper, silver, and gold; a coal mine that produces coal and coke; and a zinc refinery. It has interests in 44,182 hectares of exploration concessions in Peru; 148,122 hectares of exploration concessions in Mexico; 64,899 hectares of exploration concessions in Argentina; 36,387 hectares of exploration concessions in Chile; and 7,298 hectares of exploration concessions in Ecuador. The company was founded in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation.
Nexa Resources Company Profile
Nexa Resources S.A., through its subsidiaries, primarily produces, refines, processes, and sells zinc in Peru and Brazil. It explores, extracts, produces, and trades zinc, copper, and lead concentrates through its mining sites located in the regions of Pasco, Ica, and Moquegua in Peru. The company also has copper mining project located in the Conchucos District, Ancash Region; poly-metallic mining project located in the Ancash Region; and copper mining project located in the Huancavelica Region, as well as zinc mines in Vazante and Paracatu. In addition, it refines byproducts, such as sulfuric acid, copper, and silver. The company serves chemical, petrochemical, rubber, pulp, metallurgy, mining, agricultural, and other sectors; and exports its zinc to Europe and the Americas. The company was formerly known as VM Holding S.A. and changed its name to Nexa Resources S.A. in September 2017. The company was founded in 1956 and is headquartered in Luxembourg City, Luxembourg. Nexa Resources S.A. is a subsidiary of Votorantim S.A.
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