Could Hecla Mining Beat Analysts’ Estimates in 2017?



Hecla Mining’s consensus rating

Among the silver miners (SIL) we’re focusing on in this series, Hecla Mining (HL) has the fewest “buy” ratings, earning them from just 20% of analysts. Of the analysts covering it, 10% rate it as “sell” while 70% rate it as “hold.” Hecla has not seen many rating changes in the last year. It has a target price of $6.28, which implies a potential upside of 16.7% based on its current market price.

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Hecla Mining’s revenue estimate

According to data compiled by Thomson Reuters, analysts expect Hecla Mining to achieve revenue of $140 million in 2Q17, a fall of 18.2% YoY (year-over-year). Analysts also expect its revenue to fall YoY in 2017, by 1.5%. Since Hecla’s 1Q17 results, analysts have downgraded their revenue expectations for 2017 by 6%, mostly because of Hecla’s suspension of production guidance due to a strike at its Lucky Friday mine in Idaho.

Earnings estimates

Hecla’s EBITDA (earnings before interest, tax, depreciation, and amortization) estimates also took a hit after its 1Q17 results. Analysts have downgraded their 2017 EBITDA estimates by 15% to $216.5 million in 2017, implying a YoY drop of 10%. Its margins are expected to narrow to 34% in 2017 from 37% in 2016.

A margin expansion is expected in 2018 and 2019, mainly due to Hecla Mining’s cost-cutting efforts and improved precious metal price (DBP) forecasts. However, Hecla Mining isn’t unique as far as cost-cutting efforts are concerned. Gold and silver miners IAMGOLD (IAG), AngloGold Ashanti (AU), and First Majestic Silver (AG) are also trying to reduce their costs.


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