Hecla Mining Co (HL)'s True Worth: Is It Overpriced? An In-Depth Exploration
Hecla Mining Co (NYSE:HL) experienced a daily loss of -4.3 %, with a 3-month loss of -23.99%. The Loss Per Share stands at 0.08. Given these figures, one might wonder: is the stock modestly undervalued? In this article, we will delve into a comprehensive valuation analysis of Hecla Mining Co (NYSE:HL) to answer this question.
Introduction to Hecla Mining Co
Hecla Mining Co is a prominent player in the production and exploration of silver, gold, lead, and zinc. The company's primary business segments include Greens Creek, Lucky Friday, Keno Hill, Casa Berardi, and Nevada Operations. A significant portion of its revenue stems from Canada. The company's stock price stands at $4.01, while the GF Value, an estimation of the fair value, is $5.1. This comparison suggests that the stock might be modestly undervalued.
The GF Value Explained
The GF Value is a unique valuation method developed by GuruFocus. It calculates the fair value of a stock based on historical multiples, a GuruFocus adjustment factor influenced by past company performance and growth, and future business performance estimates. The GF Value Line on our summary page provides a quick overview of the fair value of a stock. If the stock price significantly deviates from the GF Value Line, it can indicate overvaluation or undervaluation, affecting future returns.
Hecla Mining Co (NYSE:HL) appears to be modestly undervalued according to the GF Value. This implies that the long-term return of its stock is likely to be higher than its business growth.
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Assessing Hecla Mining Co's Financial Strength
Investors must scrutinize a company's financial strength before buying shares to avoid potential capital loss. Hecla Mining Co's cash-to-debt ratio is 0.19, ranking lower than 87.46% of 2608 companies in the Metals & Mining industry. This suggests a fair balance sheet, with GuruFocus ranking Hecla Mining Co's financial strength as 5 out of 10.
Profitability and Growth of Hecla Mining Co
Investing in profitable companies typically carries less risk. Hecla Mining Co has been profitable for 3 years over the past decade. With revenues of $718.30 million and a Loss Per Share of $0.08 in the past 12 months, its operating margin of 5.26% is better than 60.42% of 854 companies in the Metals & Mining industry. However, GuruFocus ranks Hecla Mining Co's profitability as poor.
Growth is a crucial factor in company valuation. The faster a company grows, the more likely it is creating value for shareholders. Hecla Mining Co's 3-year average annual revenue growth rate is -2.1%, ranking lower than 76.9% of 606 companies in the Metals & Mining industry. The 3-year average EBITDA growth rate is -1.4%, which ranks lower than 63.1% of 1859 companies in the Metals & Mining industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can help determine its profitability. Over the past 12 months, Hecla Mining Co's ROIC is 1.29, and its cost of capital is 11.94.
Conclusion
In summary, Hecla Mining Co (NYSE:HL) appears to be modestly undervalued. The company's financial condition is fair, but its profitability is poor. Its growth ranks lower than 63.1% of 1859 companies in the Metals & Mining industry. To learn more about Hecla Mining Co stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
