Intrinsic value of Southern Copper - SCCO

Previous Close

$37.74

  Intrinsic Value

$84.04

stock screener

  Rating & Target

str. buy

+123%

Previous close

$37.74

 
Intrinsic value

$84.04

 
Up/down potential

+123%

 
Rating

str. buy

We calculate the intrinsic value of SCCO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 29.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  20.10
  18.59
  17.23
  16.01
  14.91
  13.92
  13.02
  12.22
  11.50
  10.85
  10.27
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.20
  6.08
  5.98
  5.88
  5.79
  5.71
Revenue, $m
  7,992
  9,478
  11,111
  12,890
  14,811
  16,872
  19,070
  21,400
  23,861
  26,450
  29,166
  32,006
  34,971
  38,062
  41,280
  44,627
  48,107
  51,724
  55,483
  59,389
  63,448
  67,669
  72,059
  76,626
  81,380
  86,331
  91,490
  96,868
  102,477
  108,330
Variable operating expenses, $m
  1,324
  1,567
  1,834
  2,125
  2,440
  2,777
  3,137
  3,519
  3,922
  4,345
  4,775
  5,240
  5,725
  6,231
  6,758
  7,306
  7,876
  8,468
  9,083
  9,722
  10,387
  11,078
  11,797
  12,544
  13,323
  14,133
  14,978
  15,858
  16,776
  17,734
Fixed operating expenses, $m
  3,080
  3,148
  3,217
  3,288
  3,360
  3,434
  3,510
  3,587
  3,666
  3,747
  3,829
  3,913
  3,999
  4,087
  4,177
  4,269
  4,363
  4,459
  4,557
  4,658
  4,760
  4,865
  4,972
  5,081
  5,193
  5,307
  5,424
  5,543
  5,665
  5,790
Total operating expenses, $m
  4,404
  4,715
  5,051
  5,413
  5,800
  6,211
  6,647
  7,106
  7,588
  8,092
  8,604
  9,153
  9,724
  10,318
  10,935
  11,575
  12,239
  12,927
  13,640
  14,380
  15,147
  15,943
  16,769
  17,625
  18,516
  19,440
  20,402
  21,401
  22,441
  23,524
Operating income, $m
  3,588
  4,763
  6,059
  7,476
  9,011
  10,660
  12,423
  14,295
  16,274
  18,358
  20,562
  22,853
  25,247
  27,743
  30,345
  33,052
  35,869
  38,797
  41,842
  45,009
  48,301
  51,726
  55,290
  59,000
  62,865
  66,891
  71,089
  75,467
  80,035
  84,805
EBITDA, $m
  4,405
  5,729
  7,189
  8,784
  10,511
  12,368
  14,350
  16,456
  18,682
  21,026
  23,487
  26,063
  28,754
  31,561
  34,485
  37,528
  40,694
  43,985
  47,407
  50,965
  54,665
  58,513
  62,517
  66,686
  71,027
  75,550
  80,265
  85,182
  90,313
  95,670
Interest expense (income), $m
  357
  357
  450
  553
  666
  789
  922
  1,065
  1,217
  1,378
  1,548
  1,727
  1,915
  2,112
  2,317
  2,531
  2,753
  2,985
  3,226
  3,476
  3,736
  4,006
  4,287
  4,579
  4,883
  5,199
  5,528
  5,871
  6,228
  6,600
  6,988
Earnings before tax, $m
  3,231
  4,313
  5,506
  6,810
  8,222
  9,738
  11,358
  13,078
  14,896
  16,810
  18,835
  20,938
  23,135
  25,427
  27,814
  30,299
  32,884
  35,572
  38,366
  41,272
  44,295
  47,439
  50,711
  54,117
  57,666
  61,363
  65,218
  69,239
  73,436
  77,818
Tax expense, $m
  872
  1,164
  1,487
  1,839
  2,220
  2,629
  3,067
  3,531
  4,022
  4,539
  5,085
  5,653
  6,246
  6,865
  7,510
  8,181
  8,879
  9,604
  10,359
  11,144
  11,960
  12,809
  13,692
  14,612
  15,570
  16,568
  17,609
  18,695
  19,828
  21,011
Net income, $m
  2,358
  3,148
  4,020
  4,971
  6,002
  7,109
  8,291
  9,547
  10,874
  12,271
  13,749
  15,285
  16,889
  18,561
  20,304
  22,118
  24,005
  25,967
  28,007
  30,129
  32,335
  34,630
  37,019
  39,506
  42,096
  44,795
  47,609
  50,545
  53,608
  56,807

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  16,547
  19,623
  23,004
  26,686
  30,665
  34,932
  39,482
  44,307
  49,403
  54,763
  60,384
  66,265
  72,404
  78,803
  85,466
  92,396
  99,601
  107,089
  114,871
  122,958
  131,363
  140,101
  149,190
  158,646
  168,489
  178,740
  189,421
  200,555
  212,168
  224,285
Adjusted assets (=assets-cash), $m
  16,547
  19,623
  23,004
  26,686
  30,665
  34,932
  39,482
  44,307
  49,403
  54,763
  60,384
  66,265
  72,404
  78,803
  85,466
  92,396
  99,601
  107,089
  114,871
  122,958
  131,363
  140,101
  149,190
  158,646
  168,489
  178,740
  189,421
  200,555
  212,168
  224,285
Revenue / Adjusted assets
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
Average production assets, $m
  10,821
  12,833
  15,044
  17,452
  20,054
  22,845
  25,820
  28,976
  32,308
  35,814
  39,490
  43,336
  47,351
  51,536
  55,893
  60,425
  65,137
  70,035
  75,124
  80,412
  85,909
  91,624
  97,567
  103,752
  110,189
  116,893
  123,878
  131,159
  138,754
  146,678
Working capital, $m
  1,135
  1,346
  1,578
  1,830
  2,103
  2,396
  2,708
  3,039
  3,388
  3,756
  4,142
  4,545
  4,966
  5,405
  5,862
  6,337
  6,831
  7,345
  7,879
  8,433
  9,010
  9,609
  10,232
  10,881
  11,556
  12,259
  12,992
  13,755
  14,552
  15,383
Total debt, $m
  7,501
  9,215
  11,098
  13,149
  15,365
  17,742
  20,276
  22,964
  25,802
  28,788
  31,919
  35,194
  38,614
  42,178
  45,889
  49,749
  53,763
  57,933
  62,268
  66,772
  71,454
  76,321
  81,383
  86,650
  92,133
  97,843
  103,792
  109,994
  116,462
  123,211
Total liabilities, $m
  9,217
  10,930
  12,813
  14,864
  17,080
  19,457
  21,991
  24,679
  27,517
  30,503
  33,634
  36,910
  40,329
  43,893
  47,604
  51,465
  55,478
  59,649
  63,983
  68,487
  73,169
  78,036
  83,099
  88,366
  93,848
  99,558
  105,507
  111,709
  118,177
  124,927
Total equity, $m
  7,330
  8,693
  10,191
  11,822
  13,584
  15,475
  17,490
  19,628
  21,885
  24,260
  26,750
  29,355
  32,075
  34,910
  37,861
  40,931
  44,123
  47,441
  50,888
  54,470
  58,194
  62,065
  66,091
  70,280
  74,641
  79,182
  83,913
  88,846
  93,990
  99,358
Total liabilities and equity, $m
  16,547
  19,623
  23,004
  26,686
  30,664
  34,932
  39,481
  44,307
  49,402
  54,763
  60,384
  66,265
  72,404
  78,803
  85,465
  92,396
  99,601
  107,090
  114,871
  122,957
  131,363
  140,101
  149,190
  158,646
  168,489
  178,740
  189,420
  200,555
  212,167
  224,285
Debt-to-equity ratio
  1.020
  1.060
  1.090
  1.110
  1.130
  1.150
  1.160
  1.170
  1.180
  1.190
  1.190
  1.200
  1.200
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.230
  1.230
  1.230
  1.230
  1.230
  1.230
  1.240
  1.240
  1.240
  1.240
  1.240
Adjusted equity ratio
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,358
  3,148
  4,020
  4,971
  6,002
  7,109
  8,291
  9,547
  10,874
  12,271
  13,749
  15,285
  16,889
  18,561
  20,304
  22,118
  24,005
  25,967
  28,007
  30,129
  32,335
  34,630
  37,019
  39,506
  42,096
  44,795
  47,609
  50,545
  53,608
  56,807
Depreciation, amort., depletion, $m
  817
  966
  1,130
  1,308
  1,501
  1,707
  1,928
  2,162
  2,408
  2,668
  2,925
  3,210
  3,507
  3,817
  4,140
  4,476
  4,825
  5,188
  5,565
  5,956
  6,364
  6,787
  7,227
  7,685
  8,162
  8,659
  9,176
  9,716
  10,278
  10,865
Funds from operations, $m
  3,175
  4,114
  5,149
  6,279
  7,503
  8,817
  10,219
  11,709
  13,283
  14,940
  16,674
  18,495
  20,396
  22,379
  24,444
  26,594
  28,830
  31,155
  33,572
  36,085
  38,699
  41,417
  44,246
  47,191
  50,258
  53,454
  56,785
  60,260
  63,886
  67,672
Change in working capital, $m
  190
  211
  232
  253
  273
  293
  312
  331
  349
  368
  386
  403
  421
  439
  457
  475
  494
  514
  534
  555
  576
  599
  623
  649
  675
  703
  733
  764
  796
  831
Cash from operations, $m
  2,985
  3,903
  4,917
  6,027
  7,230
  8,524
  9,907
  11,378
  12,933
  14,572
  16,289
  18,091
  19,975
  21,940
  23,987
  26,119
  28,336
  30,641
  33,038
  35,531
  38,122
  40,818
  43,623
  46,542
  49,583
  52,751
  56,053
  59,496
  63,090
  66,841
Maintenance CAPEX, $m
  -667
  -802
  -951
  -1,114
  -1,293
  -1,485
  -1,692
  -1,913
  -2,146
  -2,393
  -2,653
  -2,925
  -3,210
  -3,507
  -3,817
  -4,140
  -4,476
  -4,825
  -5,188
  -5,565
  -5,956
  -6,364
  -6,787
  -7,227
  -7,685
  -8,162
  -8,659
  -9,176
  -9,716
  -10,278
New CAPEX, $m
  -1,812
  -2,012
  -2,211
  -2,408
  -2,602
  -2,791
  -2,975
  -3,156
  -3,332
  -3,505
  -3,676
  -3,846
  -4,015
  -4,185
  -4,357
  -4,532
  -4,712
  -4,897
  -5,089
  -5,289
  -5,497
  -5,715
  -5,944
  -6,184
  -6,437
  -6,704
  -6,985
  -7,282
  -7,594
  -7,925
Cash from investing activities, $m
  -2,479
  -2,814
  -3,162
  -3,522
  -3,895
  -4,276
  -4,667
  -5,069
  -5,478
  -5,898
  -6,329
  -6,771
  -7,225
  -7,692
  -8,174
  -8,672
  -9,188
  -9,722
  -10,277
  -10,854
  -11,453
  -12,079
  -12,731
  -13,411
  -14,122
  -14,866
  -15,644
  -16,458
  -17,310
  -18,203
Free cash flow, $m
  506
  1,090
  1,756
  2,504
  3,335
  4,248
  5,240
  6,309
  7,454
  8,673
  9,960
  11,320
  12,750
  14,248
  15,813
  17,446
  19,148
  20,919
  22,762
  24,677
  26,669
  28,740
  30,892
  33,131
  35,460
  37,885
  40,409
  43,039
  45,780
  48,638
Issuance/(repayment) of debt, $m
  1,544
  1,713
  1,883
  2,051
  2,216
  2,377
  2,534
  2,688
  2,838
  2,986
  3,131
  3,275
  3,420
  3,564
  3,711
  3,860
  4,013
  4,171
  4,334
  4,504
  4,682
  4,867
  5,062
  5,267
  5,483
  5,710
  5,949
  6,202
  6,468
  6,749
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,544
  1,713
  1,883
  2,051
  2,216
  2,377
  2,534
  2,688
  2,838
  2,986
  3,131
  3,275
  3,420
  3,564
  3,711
  3,860
  4,013
  4,171
  4,334
  4,504
  4,682
  4,867
  5,062
  5,267
  5,483
  5,710
  5,949
  6,202
  6,468
  6,749
Total cash flow (excl. dividends), $m
  2,051
  2,803
  3,639
  4,555
  5,551
  6,625
  7,774
  8,997
  10,293
  11,659
  13,091
  14,596
  16,169
  17,812
  19,524
  21,306
  23,161
  25,090
  27,096
  29,182
  31,351
  33,607
  35,955
  38,398
  40,943
  43,594
  46,358
  49,240
  52,248
  55,388
Retained Cash Flow (-), $m
  -1,222
  -1,363
  -1,498
  -1,631
  -1,762
  -1,890
  -2,016
  -2,138
  -2,257
  -2,375
  -2,490
  -2,605
  -2,720
  -2,835
  -2,951
  -3,070
  -3,192
  -3,317
  -3,447
  -3,582
  -3,723
  -3,871
  -4,026
  -4,189
  -4,361
  -4,541
  -4,732
  -4,932
  -5,144
  -5,368
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  828
  1,441
  2,141
  2,924
  3,789
  4,734
  5,758
  6,859
  8,035
  9,284
  10,601
  11,991
  13,450
  14,977
  16,572
  18,236
  19,969
  21,773
  23,649
  25,599
  27,627
  29,736
  31,928
  34,209
  36,582
  39,053
  41,627
  44,308
  47,104
  50,020
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  784
  1,285
  1,789
  2,274
  2,726
  3,129
  3,470
  3,739
  3,929
  4,036
  4,058
  4,001
  3,870
  3,673
  3,423
  3,131
  2,811
  2,477
  2,141
  1,814
  1,506
  1,225
  975
  758
  576
  427
  309
  218
  149
  99
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Southern Copper Corporation is an integrated copper producer. It produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. Its segments include the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit. The Peruvian operations segment includes the Toquepala and Cuajone mine complexes, and the smelting and refining plants, including a metals plant industrial railroad and port facilities that service both mines. The Mexican open-pit operations segment includes the La Caridad and Buenavista mine complexes, and the smelting and refining plants, including a metals plant and a copper rod plant, and support facilities that service both mines. As of December 31, 2016, the Mexican underground mining operations segment included five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery.

FINANCIAL RATIOS  of  Southern Copper (SCCO)

Valuation Ratios
P/E Ratio 37.5
Price to Sales 5.4
Price to Book 5
Price to Tangible Book
Price to Cash Flow 31.6
Price to Free Cash Flow -148.8
Growth Rates
Sales Growth Rate 6.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.7%
Cap. Spend. - 3 Yr. Gr. Rate -8.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 102.1%
Total Debt to Equity 102.1%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 9.1%
Return On Equity 14%
Return On Equity - 3 Yr. Avg. 16.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 43.6%
Gross Margin - 3 Yr. Avg. 45.5%
EBITDA Margin 42%
EBITDA Margin - 3 Yr. Avg. 43.3%
Operating Margin 29.1%
Oper. Margin - 3 Yr. Avg. 31.9%
Pre-Tax Margin 23.3%
Pre-Tax Margin - 3 Yr. Avg. 27.6%
Net Profit Margin 14.4%
Net Profit Margin - 3 Yr. Avg. 17.4%
Effective Tax Rate 39.9%
Eff/ Tax Rate - 3 Yr. Avg. 38.5%
Payout Ratio 17.9%

SCCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SCCO stock intrinsic value calculation we used $6654.5 million for the last fiscal year's total revenue generated by Southern Copper. The default revenue input number comes from 0001 income statement of Southern Copper. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SCCO stock valuation model: a) initial revenue growth rate of 20.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.6%, whose default value for SCCO is calculated based on our internal credit rating of Southern Copper, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Southern Copper.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SCCO stock the variable cost ratio is equal to 16.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3014 million in the base year in the intrinsic value calculation for SCCO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6% for Southern Copper.

Corporate tax rate of 27% is the nominal tax rate for Southern Copper. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SCCO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SCCO are equal to 135.4%.

Life of production assets of 13.5 years is the average useful life of capital assets used in Southern Copper operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SCCO is equal to 14.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6107.7 million for Southern Copper - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 773.044 million for Southern Copper is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Southern Copper at the current share price and the inputted number of shares is $29.2 billion.

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COMPANY NEWS

▶ Ken Heebner Continues to Buy Itau Unibanco, Southern Copper   [Nov-13-18 04:41PM  GuruFocus.com]
▶ Southern Copper Falls on 3rd-Quarter Results   [Oct-25-18 03:36PM  GuruFocus.com]
▶ Southern Copper Declares Quarterly Dividend   [Oct-19-18 03:45PM  GuruFocus.com]
▶ Top 5 Copper Stocks for 2018   [Oct-10-18 07:07PM  Investopedia]
▶ 2 Stocks Poised to Plunge as Dollar Rises   [Jul-02-18 11:30AM  Investopedia]
▶ Will China's Tariff Policy Affect This Boise Stock?   [Apr-05-18 06:22PM  Investor's Business Daily]
▶ Why Shares Of 51job Could Drop 15%   [Apr-03-18 03:08PM  Benzinga]
▶ Sponsorship: Two Stocks That Are Among The Stock-Market Elite   [Mar-28-18 02:03PM  Investor's Business Daily]
▶ E*TRADE: Southern Copper May Be a Buy-the-Dip Contender   [Mar-09-18 02:59PM  Investopedia]
▶ 3 Top Copper Stocks to Consider Buying Now   [Feb-19-18 07:04AM  Motley Fool]
▶ Southern Copper Corp Posts 4th-Quarter Figures   [Feb-09-18 10:34AM  GuruFocus.com]
▶ Southern Copper Jumps   [Jan-28-18 09:34AM  GuruFocus.com]
▶ How Impressive Is Freeport-McMoRans 4Q17 Performance?   [Jan-26-18 02:00PM  Market Realist]
▶ Inside Freeport-McMoRans 4Q17 Revenue Beat   [12:30PM  Market Realist]
▶ Can Copper Provide Upside to BHP Billiton in Fiscal 2018?   [Jan-25-18 10:34AM  Market Realist]
▶ Investors Are Interested in These Key Updates from Freeport   [Jan-23-18 07:33AM  Market Realist]
▶ Top stocks in Mining   [Jan-18-18 06:02AM  Motley Fool]
▶ How Are BHPs Margins Expected to Progress Going Forward?   [Jan-16-18 12:40PM  Market Realist]
▶ Chinas Copper Imports: What to Expect in 2018   [09:02AM  Market Realist]
▶ What Teck Resources Investors Could Expect in 2018   [Jan-11-18 09:04AM  Market Realist]
▶ At $49.35, Is Southern Copper Corporation (NYSE:SCCO) A Buy?   [Jan-09-18 04:13PM  Simply Wall St.]
▶ 5 Companies Hit 52-Week Highs   [11:09AM  GuruFocus.com]
▶ These 4 Mining Giants Are Testing Buy Points On Tax Cuts, China, Chile   [Dec-18-17 04:06PM  Investor's Business Daily]
▶ Can Southern Copper Continue to Surprise Analysts in 2018?   [Dec-12-17 07:30AM  Market Realist]
▶ Which Copper Miner Is Wall Street Betting On in 2018?   [Dec-08-17 07:51AM  Market Realist]
▶ Whats Keeping Copper Prices Strong this Year?   [Nov-29-17 02:25PM  Market Realist]

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