Breaking Down Nexa Resources S.A. (NEXA) Financial Health: Key Insights for Investors

You're looking at Nexa Resources S.A. (NEXA) and trying to reconcile a strong operational quarter with persistent balance sheet concerns, and honestly, that's the right tension to hold. The firm defintely had a solid Q3 2025, reporting a net income of $100.1 million, a major rebound that saw their earnings per share (EPS) hit $0.52, crushing the consensus forecast. But here's the quick math on the risk: while they are generating free cash flow and driving down debt, the net leverage ratio still sits at 2.2 times, which is high for a cyclical mining business, plus their full-year capital expenditure (CAPEX) guidance of $347 million shows they are still spending heavily on sustaining investments. The real question is whether the operational wins-like the record 84,000 tons of zinc production in Q3-can outrun the macro-risks of volatile base metal prices and a challenging smelting margin environment. Let's dig into the numbers and see if the recent operational stability is enough to warrant a 'buy' or if the high leverage keeps it a 'hold' for now.

Revenue Analysis

You need a clear picture of where Nexa Resources S.A. (NEXA)'s money is coming from right now, and the short answer is: their integrated smelting business is the engine, and zinc is the core commodity. For the trailing twelve months (TTM) ending September 30, 2025, Nexa reported net revenues of approximately $2.84 billion, reflecting a solid year-over-year growth of 6.95%.

This growth is defintely a story of operational execution and favorable market dynamics, especially when you look at the quarterly trend. The company's unique integrated mine-smelter model, operating across Peru and Brazil, is what drives this stability and growth.

Here's the quick math on their recent performance, showing the momentum building through the year:

The Q3 2025 net revenue of $764 million was an 8% increase year-over-year, which is a strong signal. This sequential jump in Q2 and Q3 tells you exactly where the company is focusing its energy: converting mining output into higher-value metal products.

The revenue breakdown isn't just about digging up ore; it's about what they do next. The primary revenue streams are segmented into two key areas, with the Smelting segment showing significant strength in 2025:

• Zinc Metal and Oxide Sales: This is the bread-and-butter, driven by the Cajamarquilla and Três Marias smelters. Higher sales volumes in the smelting segment were a major driver for the Q2 and Q3 2025 revenue increases.
• By-Products Contribution: Revenue gets a crucial boost from sales of co-products like copper, lead, silver, and gold. Stronger by-product prices and sales volumes were a key factor in the revenue growth, helping offset volatility in the main zinc market.

The most significant change in the 2025 revenue stream is the clear emphasis on the smelting side. Smelting sales volume in Q2 2025 was up 12% quarter-over-quarter, and this trend continued into Q3, driving the overall net revenue beat. This integrated model is a core competitive advantage, helping Nexa reduce its exposure to raw commodity price swings and enhance margins when metal prices are favorable.

The operational improvements, like Aripuanã achieving its highest zinc production since ramp-up and the record output at the Cajamarquilla smelter, are directly translating into these higher sales figures. If you want to understand the long-term vision behind these operations, you should review the company's strategic goals: Mission Statement, Vision, & Core Values of Nexa Resources S.A. (NEXA).

Profitability Metrics

You want to know if Nexa Resources S.A. (NEXA) is efficiently turning its zinc, copper, and silver sales into profit, and the short answer is: its profitability is highly volatile but showed a significant, decisive rebound in the third quarter of 2025. This turnaround is driven by operational discipline and favorable metal prices, not just top-line growth.

In Q3 2025, Nexa Resources S.A. reported a Net Income of over US$100 million on Net Revenues of US$764 million, resulting in a Net Profit Margin of approximately 13.12%. This marks a dramatic improvement from the Net Income of US$13 million reported in Q2 2025, and a stark contrast to the company's historical volatility.

Gross, Operating, and Net Profit Margins (Q3 2025)

To understand the quality of this profit, we need to break down the margins. Gross Profit Margin tells you how well they manage production costs (Cost of Goods Sold), while Operating Profit Margin shows efficiency after adding administrative and selling costs. Net Profit Margin is the final takeaway.

Here's the quick math for Q3 2025, which ended September 30, 2025:

• Gross Profit Margin: The margin was 20.16%, with a Gross Profit of $153.96 million on revenues of $763.51 million. This is up from the Q2 2025 Gross Profit Margin of 14.75%.
• Operating Profit Margin: This is a near-term risk. Nexa Resources S.A. reported an Operating Income loss of $-35.08 million, resulting in a negative Operating Profit Margin of approximately -4.59%. This indicates that selling, general, and administrative expenses (SG&A) and depreciation are still consuming more than the gross profit.
• Net Profit Margin: The final Net Income of US$100 million delivered a solid 13.12% Net Margin. The positive shift from the operating loss to a strong net profit is largely due to non-operating factors, including a non-cash impairment reversal at the Cerro Pasco complex.

Operational Efficiency and Industry Comparison

The trend over 2025 shows a clear operational recovery. The sequential profitability growth from Q1 to Q3 2025 is defintely a positive sign, signaling that management's focus on cost control and operational stability is working. For example, their Q2 2025 mining cash cost was reported at a highly competitive -$0.11 per pound, net of by-product credits.

But how does this stack up? When we look at the broader mining sector, the Top 40 global mining companies (excluding gold) reported an average EBITDA margin of 22% in 2024. While Nexa Resources S.A.'s Q3 2025 Adjusted EBITDA margin was a strong 24.3% (US$186 million on US$764 million revenue), the negative Operating Margin shows the company is still struggling to bring its full operating expenses in line with peers. The market reflects this concern: Nexa Resources S.A.'s Price-to-Sales (P/S) ratio sits at about 0.3x, significantly below the industry average of 2.8x, suggesting a deep valuation discount due to historical margin volatility and execution risk.

Here is a snapshot of the 2025 trend:

The good news is that management expects future profitability to be driven by margin expansion and cost controls, with projected annual earnings growth of 21.95%, outpacing the forecast revenue growth of just 2%. This focus on margin is what you should be watching.

To be fair, the full story of Nexa Resources S.A.'s long-term strategy requires looking beyond the numbers to their capital allocation and strategic projects. You can read more about their core philosophy here: Mission Statement, Vision, & Core Values of Nexa Resources S.A. (NEXA).

Next Step: Finance: Map the Q3 2025 non-operating income components (like the impairment reversal) to forecast how much of the Net Income is truly sustainable operating profit for Q4 2025.

Debt vs. Equity Structure

You need to know how Nexa Resources S.A. (NEXA) funds its operations and growth, because a company's capital structure-the mix of debt and equity-is a direct measure of its financial risk. The direct takeaway is that Nexa Resources S.A. is a capital-intensive miner that relies heavily on debt financing, with a Debt-to-Equity (D/E) ratio significantly higher than its regional peers.

As of the third quarter of 2025 (3Q25), Nexa Resources S.A.'s Debt-to-Equity ratio stood at approximately 1.46:1, or 146.1%. This means for every dollar of shareholder equity, the company has about $1.46 in total debt. This is a crucial number to watch. To be fair, mining is a capital-intensive business, but when you look at the average D/E for the Peruvian mining sector, it is closer to 0.52:1. So, Nexa Resources S.A. is carrying a much higher leverage load than many of its competitors in the region.

The company's balance sheet for 3Q25 shows total debt around US$1.834 billion, against total shareholder equity of approximately US$1.255 billion. This level of leverage is manageable when metal prices are strong, but it definitely increases risk when market conditions turn negative or a major capital expenditure (CapEx) project hits a snag.

• Total Debt (3Q25): ~US$1.834 billion.
• Total Equity (3Q25): ~US$1.255 billion.
• D/E Ratio: 1.46:1.

Debt Breakdown and Strategic Refinancing

A closer look at the debt structure reveals that the majority of the company's obligations are long-term, which is typical for a mining company with long-life assets. As of a recent filing (Q4 2024/Q1 2025 data), the company reported approximately $1.711 billion in Long Term Debt, with Short Term Debt at about $50.883 million. The low short-term debt relative to long-term debt suggests good near-term liquidity management, which is a positive sign for avoiding immediate cash-crunch risks.

Nexa Resources S.A. has been proactive in managing its debt maturity profile. In April 2025, the company successfully issued US$500 million in 6.600% Senior Unsecured Notes due in 2037. [cite: 7 in previous step, 13 in previous step] This issuance was a deliberate move to repurchase existing notes due in 2027 and 2028, effectively extending the average debt maturity to an impressive 10.4 years. [cite: 4 in previous step] That's a smart move to align debt payments with the long-term cash flow generation of their mines.

This disciplined liability management has helped maintain their credit profile. As of 2025, the company holds investment-grade ratings from two major agencies: Fitch and S&P both rate them BBB- with a Stable outlook. [cite: 14 in previous step] Moody's has them at Ba2, also with a Stable outlook. [cite: 14 in previous step] This is how they balance: they use debt to fund massive CapEx projects like the Aripuanã mine, but they are defintely careful to keep the repayment schedule far out and maintain their investment-grade status to keep borrowing costs low. For a deeper dive into the company's full financial picture, you can check out the rest of the post at Breaking Down Nexa Resources S.A. (NEXA) Financial Health: Key Insights for Investors.

Next Step: Review the company's 2026 CapEx guidance to see if the recent debt-funded growth is translating into expected production increases and cash flow. Finance: Draft a sensitivity analysis on the D/E ratio at various zinc price points by the end of the week.

Liquidity and Solvency

You need to know if Nexa Resources S.A. (NEXA) can cover its near-term bills, and the answer is that while the operational cash flow is strong and improving, the immediate liquidity ratios signal a tight spot that requires close monitoring. The firm has a solid cash cushion against debt maturities, but the day-to-day liquidity metrics are below the comfort zone.

The standard gauges of short-term financial health-the Current Ratio and Quick Ratio (Acid-Test Ratio)-show a constrained position. As of the latest data, the Current Ratio, which measures current assets against current liabilities, sits at 0.91. The Quick Ratio, which excludes inventory (the least liquid current asset), is even lower at 0.60. Neither of these is above the traditional 1.0x or 0.8x benchmarks, respectively. This means that if all current liabilities came due immediately, the company would not have enough readily convertible assets to cover them without selling off inventory or securing new financing. It's tight, but not defintely a crisis.

Here's the quick math on the liquidity position as of the most recent data:

• Current Ratio of 0.91: For every dollar of short-term debt, Nexa Resources S.A. has only $0.91 in short-term assets.
• Quick Ratio of 0.60: Excluding inventory, the company has only $0.60 in cash and receivables to cover every dollar of short-term debt.

The working capital trend, however, is moving in the right direction. In Q1 2025, Nexa Resources S.A. experienced a seasonal working capital intensity that drove free cash flow negative by $226 million. Management committed to optimizing this, and by Q2 2025, free cash flow had improved significantly to a positive $17 million. This reversal shows effective working capital management and improving operational performance in the first half of the year.

The cash flow statements for the third quarter of 2025 (Q3 2025) confirm a strengthening trend in cash generation. The company generated $196 million in Operating Cash Flow (OCF) before working capital adjustments. This strong operational performance, coupled with better working capital management, resulted in a positive Free Cash Flow of $52 million for the quarter.

To see where the cash went, look at the three core cash flow activities in Q3 2025:

The overall liquidity position is a mix of near-term tightness and long-term strength. The available liquidity at the end of Q3 2025 stood at a robust $790 million. Crucially, the total cash position at the end of Q1 2025 was sufficient to cover all debt obligations maturing over the next three years. This is a major strength. The net debt-to-Adjusted EBITDA ratio also improved to 2.2x in Q3 2025 from 2.3x in the prior quarter, which is a key deleveraging signal.

The takeaway here is that while the Current and Quick Ratios suggest a need for continued focus on managing receivables and payables, the underlying cash flow generation is healthy and the capital structure is sound enough to cover debt for years. For a deeper look at the company's long-term strategy, you can check out the full post: Breaking Down Nexa Resources S.A. (NEXA) Financial Health: Key Insights for Investors.

Next Step: Portfolio Manager: Model a sensitivity analysis on the Current Ratio, showing the impact of a 10% delay in accounts receivable collection.

Valuation Analysis

Based on a review of core valuation multiples against its sector peers, Nexa Resources S.A. (NEXA) appears to be undervalued on a forward-looking earnings basis, but its high debt and recent stock volatility signal a complex risk profile. The market seems to be pricing in significant operational risk despite a strong Q3 2025 performance.

You're looking at a zinc producer that just reported Q3 2025 net income of $100 million, a huge jump from prior quarters, but the stock still trades at a discount. Here's the quick math on why this is a mixed signal.

• Forward P/E (Price-to-Earnings): The forward P/E ratio sits at an attractive 5.39. This is defintely low, signaling that the market expects future earnings to be strong relative to the current stock price, or that there's a deep discount for risk.
• P/B (Price-to-Book): The Price-to-Book ratio is 0.85. Since this is below 1.0, it suggests the stock is trading for less than the value of its net assets, which is a classic sign of undervaluation in the mining sector.
• EV/EBITDA (Enterprise Value-to-EBITDA): The EV/EBITDA is 3.89. This is quite low for a mining company, especially when compared to the sector average, indicating the company's total value (equity plus net debt) is cheap relative to its operating cash flow.

The low valuation multiples are compelling, but they hide the company's recent earnings volatility. The trailing twelve months (TTM) P/E is negative because of prior losses, which is why the forward-looking P/E is the more actionable metric here.

Stock Price Trend and Volatility

The stock has been on a rollercoaster over the past year. As of November 2025, the price is around the $6.15 mark, but it has seen a significant decline of approximately -17.98% over the last 52 weeks. This price action reflects the volatile commodity market and the company's own operational challenges earlier in the year.

The 52-week range tells the story of investor sentiment: the price hit a high of $9.61 around December 2024 before dipping to a low of $4.438 in June 2025. This wide swing shows the stock is sensitive to zinc price movements and operational news, plus its beta of 0.63 suggests it's less volatile than the overall market, which is surprising given the price swings.

Dividend Profile and Payout Stability

Nexa Resources S.A. is not a high-yield play, but it does offer a distribution. The company announced a new dividend policy effective January 1, 2025, targeting a payout of up to 20% of free cash flow pre-events, with a minimum payment of $0.08 per common share. For investors, this links the dividend directly to cash generation, which is a more sustainable model.

The current annual payout is $0.10 per share, giving a dividend yield of approximately 1.62%. More importantly, the forecast payout ratio for next year is an extremely conservative 11.49% based on earnings estimates. This low ratio suggests the dividend is well-covered and sustainable, even if earnings dip slightly from the projected $0.87 per share for the next year.

Analyst Consensus and Price Target

The professional consensus is cautious, which helps explain the low valuation. The average analyst rating on Nexa Resources S.A. is a Hold or Reduce, not a 'Buy.' This is important because it tells you the street is not yet convinced the operational improvements seen in Q3 2025 are fully sustainable.

The median 12-month price target from Wall Street is $5.75. This target is actually slightly below the current trading price, which suggests that, in the near-term, analysts see limited upside from the current level. For a deeper dive into the company's operational strengths and weaknesses, you should review our full analysis at Breaking Down Nexa Resources S.A. (NEXA) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Nexa Resources S.A. (NEXA) after a solid Q3 2025, but a seasoned investor knows that strong quarterly results don't erase structural risks. The company has done a good job on operational execution, yet the core challenges remain a mix of external market volatility and internal operational hurdles, especially as they finish major projects. We need to focus on what could derail their goal of sustained cash flow.

The biggest external risk is the price of zinc, which is Nexa Resources S.A.'s primary product. While the CEO expressed confidence in the long-term outlook, price volatility is a constant threat that directly impacts revenue and margin. Plus, the global macroeconomic picture is still messy, with risks of a recession, persistent inflation, and geopolitical tensions-like the Russia-Ukraine war and Iran-Israel tensions-that can disrupt global supply chains and increase input costs. Honestly, the mining sector is defintely exposed to these macro winds.

Operational and Financial Headwinds

The recent earnings reports, including Q3 2025, highlight specific operational and financial risks you must track. Operationally, the ramp-up of new mines is never seamless. Nexa Resources S.A. has faced operational challenges at its Aripuana and Vazante mines earlier in 2025. A key internal risk is the high workforce turnover at the Aripuana mine, which sits between 18% and 20% and impacts the stability of their operations. The smelting segment also faces a challenging margin environment, reporting an Adjusted EBITDA of just $23 million in Q3 2025, reflecting the difficulty in securing third-party concentrates amid reduced treatment charges (TCs), which is the fee smelters charge miners to process their concentrate.

On the financial side, the company's leverage is still a concern, even with recent improvements. Here's the quick math: the Net Debt to Last Twelve Months (LTM) Adjusted EBITDA ratio stood at 2.2x at the end of Q3 2025, down from 2.3x in the previous quarter, but still relatively high for a commodity producer in a volatile market. The other major risk is political and regulatory instability in the Latin American countries where they operate, primarily Brazil and Peru, which could change their cost structures or production levels at any moment. You can read more about their core values and long-term vision here: Mission Statement, Vision, & Core Values of Nexa Resources S.A. (NEXA).

Mitigation and Deleveraging Strategies

Nexa Resources S.A. is actively working to mitigate these risks, which is what you want to see. Their primary financial strategy is deleveraging, with a clear goal to reduce gross debt by $500 million to $600 million over the next four years and bring the net leverage ratio closer to 1x. They are also optimizing their capital structure by diversifying funding sources. Their total consolidated Capital Expenditure (CapEx) guidance for the full-year 2025 remains at $347 million, with the bulk-$316 million-allocated to sustaining investments.

To address operational stability and growth, they are focused on two major projects:

• Accelerating the Cerro Pasco Integration Project, which is advancing on Phase I and is expected to leverage a high-potential mineral district with a potential mine life of over 15 years.
• Installing the fourth tailings filter at Aripuana, which is critical to achieving full production capacity and is scheduled for commissioning in early 2026.

Their focus on operational discipline, margin protection, and cash flow generation is the right approach to weather the zinc price uncertainty. They know they have to be efficient to survive the downcycles.

Growth Opportunities

You're looking for a clear path forward on Nexa Resources S.A. (NEXA), and the growth story for 2025 is less about massive top-line expansion and more about margin discipline and operational stability. The key takeaway is that management is pivoting from a capital-intensive build-out to extracting value from existing assets, which is a smart move in a volatile metals market.

The company's growth is anchored by two major operational catalysts. First, the Aripuanã mine is stabilizing, delivering a record zinc production quarter in Q3 2025, and the installation of a fourth tailings filter-expected to be fully operational by mid-2026-is a critical step to mitigate seasonal production bottlenecks. Second, the Cerro Pasco Integration Project is moving ahead, with $30 million invested year-to-date in 2025, aiming to extend the operational life of that complex by over 15 years. That's a long-term value creator.

Here's the quick math on the near-term financial picture: the focus on cost control is defintely paying off. While the revenue growth is projected to be a modest 2% annually, the earnings are forecast to accelerate at an annual rate of 21.95%. This tells you the real story is margin expansion, not just chasing volume.

For the full 2025 fiscal year, the projected revenue is around $2.789 billion, with a slight increase to $2.840 billion projected for 2026. The Q3 2025 results already showed strong momentum, with net revenues hitting $764 million and an Earnings Per Share (EPS) of $0.52, significantly beating the analyst forecast.

Nexa Resources S.A.'s competitive advantage, which many investors overlook, is its integrated mine-smelter business model (vertical integration). This structure helps reduce exposure to market volatility and enhances margins, especially when metal prices are favorable. Plus, their cost management is excellent, with the consolidated mining cash cost net of by-products improving to a remarkable -$0.49 per pound in Q3 2025. That's a powerful buffer against price swings.

The company is also executing a disciplined financial strategy to improve its balance sheet, aiming to reduce gross debt by $500 million to $600 million over the next four years to bring net leverage closer to 1x. This deleveraging provides more flexibility in a cyclical industry. You can learn more about the investor base in Exploring Nexa Resources S.A. (NEXA) Investor Profile: Who's Buying and Why?

The strategic initiatives driving this growth are clear and capital-efficient:

• Stabilize Aripuanã: Installing the fourth tailings filter to reach full capacity by mid-2026.
• Extend Mine Life: Advancing the Cerro Pasco Integration Project, with a $44 million CapEx guidance for Phase 1 in 2025.
• Operational Excellence: Investing $4 million in automation projects and a biofuel project at Três Marias to lower long-term operating costs.
• Resource Replenishment: Maintaining a strong exploration investment guidance of $88 million for 2025.

What this estimate hides is the continued volatility in zinc prices and the high workforce turnover at Aripuanã, which still sits around 18-20%. Those are real risks that could affect the timing of the full ramp-up. Still, the underlying production guidance for 2025 remains solid, with the following mid-range targets:

Your next step is to monitor the Q4 2025 production and cash cost figures, specifically looking for any updates on the Aripuanã filter installation timeline and the net leverage ratio. Finance: track Q4 cash cost net of by-products versus the Q3 figure.