Southern Copper (SCCO) Stock Faces Rich Valuation Despite 35.9% Net Margin Supporting Bullish Narratives

Southern Copper (NYSE:SCCO) has put up another solid quarter, with Q2 2026 revenue at US$4.3 billion and basic EPS of US$2.01, underpinned by net income of US$1.7 billion. The company has seen revenue move from US$3.1 billion in Q1 2025 to US$4.3 billion in Q2 2026, while quarterly EPS has ranged from US$1.14 to US$2.01 across that period, setting up a story of strong trailing profit metrics and firm margins that investors will weigh against more modest growth expectations.

See our full analysis for Southern Copper.

With the latest numbers on the table, the next step is to see how this earnings profile lines up with the widely held narratives around Southern Copper's growth, risk and profit sustainability, and where those stories might be challenged by the data.

See what the community is saying about Southern Copper

Margins stay elevated at 35.9%

• Over the last 12 months, Southern Copper converted US$15.8b of revenue into US$5.7b of net income, which works out to a 35.9% net profit margin compared with 30.4% a year earlier.
• Bulls point to this high margin as support for their view that Southern Copper can keep generating strong profits, and the latest numbers give them some backing:
  • Trailing twelve month basic EPS sits at US$6.76 versus a five year compound earnings growth rate of 10.7% per year, while earnings over the last year are described as 56.9% higher than the five year average.
  • At the same time, the bullish narrative expects margins to rise further over time, so the current 35.9% margin is a key reference point investors can use when judging whether those expectations look reasonable.

For investors who want to see how these margin trends line up with the optimistic long term story some bulls are using, it is worth reading their full case in context 🐂 Southern Copper Bull Case.

Revenue growth steady, not rapid

• On a trailing basis, revenue of US$15.8b compares with a forecast growth rate of about 3.8% per year, while quarterly revenue has moved from US$3,051m in Q2 2025 to US$4,289m in Q2 2026 without a matching long term growth outlook in the data.
• Bears focus on this more modest revenue trajectory when they question how much upside is left in Southern Copper:
  • The cautious narrative assumes revenue remains fairly flat over the next 3 years, which contrasts with the history of earnings growth but is more in line with the 3.8% revenue growth forecast that sits below the 12.8% figure cited for the broader US market.
  • At the same time, the bearish view still assumes margins could reach about 39.1%, so the tension for investors is whether relatively slow revenue growth combined with high margins justifies paying a premium valuation for the stock.

Skeptical investors who want to see how these revenue assumptions feed into a more cautious long term story can review the full bearish case side by side with the latest figures 🐻 Southern Copper Bear Case.

Premium P/E against DCF fair value

• The stock trades on a trailing P/E of 28.8x at a share price of US$195.48, versus 17.3x for the US Metals & Mining industry and 20.8x for peers, while a DCF fair value of US$108.66 sits well below both the market price and the analyst price target of US$167.79.
• What stands out for both bullish and bearish investors is how these valuation markers line up with the growth and margin profile:
  • Supporters highlight the combination of 35.9% net margin and strong trailing EPS metrics when arguing that a higher than average P/E can be sensible for Southern Copper.
  • Critics point to the gap between the US$195.48 share price and the US$108.66 DCF fair value, along with only about 5.06% forecast annual EPS growth, as reasons to question how much more investors are willing to pay for the same level of earnings.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Southern Copper on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

After weighing the bullish and bearish narratives around Southern Copper, the key question is how this mix of high margins, modest forecasts and valuation trade offs fits with your risk tolerance. Take a closer look at the underlying data, then factor in both the concerns and potential upsides by reviewing the 2 key rewards and 1 important warning sign

See What Else Is Out There

For all of Southern Copper's strong margins, the combination of modest forecast revenue and EPS growth alongside a higher P/E and DCF fair value gap suggests valuation risk.

If you are concerned about paying up for slower growth and want ideas that look cheaper against their fundamentals, check out the 47 high quality undervalued stocks today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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