SCCO's Valuation Models in Dispute: Earnings-Based DCF Suggests Fair Value
Southern Copper Corp (SCCO) has seen significant price performance over the past year, increasing by 88.6%. However, a disparity exists between valuation models for the company's intrinsic value.
The DCF earnings-based model projects a robust growth rate of 20.5% for the next ten years, followed by a terminal growth phase at a more conservative rate of 4% for the subsequent ten years. The discount rate applied is 12%, derived from the risk-free rate and equity risk premium.
The calculation summary for the DCF earnings-based model indicates an intrinsic value of $208.63, suggesting that the stock is fairly valued with a margin of safety of 9.7%. In contrast, the free cash flow (FCF) based intrinsic value for SCCO is calculated at $82.19, indicating significant overvaluation.
The GF Value for Southern Copper Corp stands at $143.93, providing a third valuation perspective that diverges from the DCF models. This emphasizes the importance of considering multiple valuation perspectives when assessing the company's value.