Southern Copper (NYSE:SCCO) vs. SunCoke Energy (NYSE:SXC) Critical Contrast

Southern Copper (NYSE:SCCO) and SunCoke Energy (NYSE:SXC) are both materials companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Valuation and Earnings

This table compares Southern Copper and SunCoke Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Copper	$13.42 billion	12.58	$4.33 billion	$6.84	29.58
SunCoke Energy	$1.84 billion	0.47	-$44.20 million	($0.64)	-15.77

Southern Copper has higher revenue and earnings than SunCoke Energy. SunCoke Energy is trading at a lower price-to-earnings ratio than Southern Copper, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Southern Copper and SunCoke Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Copper	7	5	2	0	1.64
SunCoke Energy	0	2	0	0	2.00

Southern Copper presently has a consensus price target of $156.02, indicating a potential downside of 22.89%. SunCoke Energy has a consensus price target of $9.00, indicating a potential downside of 10.80%. Given SunCoke Energy’s stronger consensus rating and higher possible upside, analysts clearly believe SunCoke Energy is more favorable than Southern Copper.

Volatility & Risk

Southern Copper has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, SunCoke Energy has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Institutional and Insider Ownership

7.9% of Southern Copper shares are held by institutional investors. Comparatively, 90.5% of SunCoke Energy shares are held by institutional investors. 0.1% of Southern Copper shares are held by company insiders. Comparatively, 1.7% of SunCoke Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Southern Copper pays an annual dividend of $4.40 per share and has a dividend yield of 2.2%. SunCoke Energy pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Southern Copper pays out 64.3% of its earnings in the form of a dividend. SunCoke Energy pays out -75.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SunCoke Energy has raised its dividend for 4 consecutive years. SunCoke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Southern Copper and SunCoke Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern Copper	35.87%	49.04%	25.81%
SunCoke Energy	-2.88%	6.37%	2.28%

Summary

Southern Copper beats SunCoke Energy on 10 of the 17 factors compared between the two stocks.

About Southern Copper

Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. 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, copper, molybdenum, silver, gold, 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 in Mexico. The company also operates Buenavista, an open-pit copper mine, as well as two copper concentrators and two operating SX-EW plants in Mexico. In addition, it operates underground mines that produce zinc, lead, copper, silver, and gold; a coal mine; and a zinc refinery. The company has interests in 156,818 hectares and 502,688 hectares of concessions in Peru and Mexico; and 168,200 hectares and 28,453 hectares of exploration concessions in Argentina and Chile. Southern Copper Corporation was incorporated in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation.

About SunCoke Energy

SunCoke Energy, Inc. operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. The company was founded in 1960 and is headquartered in Lisle, Illinois.