Hecla Mining’s “buy” ratings
Of the silver miners (SIL) we’re covering in this series, Hecla Mining (HL) has a higher percentage of “buy” ratings only in comparison to Tahoe Resources (TAHO). Only 42% of analysts are recommending a “buy” for the stock. Another 50% of analysts are recommending a “hold,” while the remaining 8% are rating it a “sell.” However, analysts’ optimism for the stock has risen significantly. One year back, only 18% of analysts were recommending a “buy.” In contrast to Hecla, the analyst sentiment for Pan American Silver (PAAS) has worsened.
Poor stock performance
Hecla’s stock price performance is only better in comparison to Tahoe’s year-to-date performance. Hecla’s operating performance was strong in Q2 2018, as it reported a revenue jump of 10% and impressive operating cash flows. While the stock soared immediately after the results release, investors returned to being cautious about the company’s ongoing Lucky Friday mine strike. The strike has been going on for 17 months now. Moreover, investors are also concerned about the decelerating production profile of its San Sebastian mine, which could lead to a significant reduction in cash flows as well.
Hecla Mining’s estimates
According to the consensus estimate, Hecla Mining is expected to report revenue of $631 million in 2018, a rise of 9.2% YoY (year-over-year). Analysts expect some of the company’s production to be offset by declining production from San Sebastian.
The company’s EBITDA is expected to take a hit from issues at the Lucky Friday mine. Analysts expect EBITDA to decline by 19.6% YoY in 2018. Its costs are also expected to decline as its cost-effective mine, San Sebastian, nears the end of its mine life. Its remaining reserves are lower in grade.
Of all the stocks we’ve covered in this series, Tahoe Resources (TAHO) is trading at the lowest enterprise-value-to-forward-EBITDA multiple of 3.5x.
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