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Hecla Mining Company's (NYSE:HL) Has Found A Path To Profitability

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We feel now is a pretty good time to analyse Hecla Mining Company's (NYSE:HL) business as it appears the company may be on the cusp of a considerable accomplishment. Hecla Mining Company, together with its subsidiaries, discovers, acquires, develops, and produces precious and base metal properties in the United States and internationally. With the latest financial year loss of US$100m and a trailing-twelve-month loss of US$59m, the US$2.7b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Hecla Mining's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Hecla Mining

Consensus from 6 of the American Metals and Mining analysts is that Hecla Mining is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$15m in 2020. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 190% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Hecla Mining's upcoming projects, however, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 31% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Hecla Mining, so if you are interested in understanding the company at a deeper level, take a look at Hecla Mining's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

  1. Valuation: What is Hecla Mining 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 Hecla Mining is currently mispriced by the market.

  2. 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 background.

  3. 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.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.