Hecla Mining Company's (NYSE:HL): Hecla Mining Company, together with its subsidiaries, discovers, acquires, develops, and produces precious and base metal properties worldwide. On 31 December 2019, the US$1.6b market-cap posted a loss of -US$100.1m for its most recent financial year. Many investors are wondering the rate at which HL will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for HL.
Consensus from the 6 Metals and Mining analysts is HL is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$29m in 2021. Therefore, HL is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which HL must grow year-on-year. It turns out an average annual growth rate of 155% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for HL given that this is a high-level summary, though, bear in mind that typically a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that HL has managed its capital judiciously, with debt making up 30% of equity. This means that HL has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on HL, so if you are interested in understanding the company at a deeper level, take a look at HL’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Valuation: What is HL worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether HL is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Hecla Mining’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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