Hecla Mining's Share Price Lags Behind Earnings Growth Over Three Years

Hecla Mining's three-year returns have not grown faster than the company's underlying earnings growth. The share price is up 43% in the last three years, but the market return is higher. The company's three-year TSR is 46%, exceeding the share price return due to dividends. Despite a 1.5% loss in the last year, long-term shareholders have made a 1.6% per year gain over the past five years.

Hecla Mining (NYSE: HL) has been a topic of interest among investors due to the significant disparity between its stock price and its intrinsic value. As of July 2025, HL's stock price stands at $6.11, while GuruFocus' Projected FCF model values the company at just $2.56 per share [1]. This valuation gap of 2.4x presents an intriguing opportunity for investors willing to look past near-term headwinds.

The valuation disconnect stems from several factors. GuruFocus' model penalizes HL for inconsistent free cash flow and assigns a conservative growth multiple. However, it also assumes no meaningful turnaround in operations—a premise that may no longer hold true. Despite this, the company's recent operational milestones and undemanding valuation relative to peers suggest the pullback could be fleeting.

Several catalysts could accelerate HL's path to cash flow stability and revaluation. Greens Creek mine in Alaska has hit new production highs, with silver output surging to 2.5 million ounces annually, a 20% increase over 2024. The mine's cost structure has improved, with all-in sustaining costs falling to $14/oz in Q1 2025 [1]. Additionally, the U.S. Department of the Interior's FAST-41 designation for HL's Libby Project in Montana is a game-changer, accelerating permitting timelines and adding significant mineral resources [1].

Analysts' recent rating downgrades and price target cuts stem from short-term pain, not long-term failure. BMO Capital's downgrade to “Market Perform” cites rising input costs and delays at Keno Hill, a silver mine in Canada. However, these issues are being addressed, with operational resets and strategic cost control measures in place [1].

The investment case for Hecla Mining is compelling. If the company's FCF stabilizes and the growth multiple expands, its intrinsic value could jump significantly. Factoring in the Libby Project's potential contribution, the intrinsic value could hit $6.00/share, closing the valuation gap and offering a 95% upside [1]. Even a partial realization of Libby's potential would make HL's stock price reasonable.

However, risks remain. Libby permitting delays, silver price volatility, and debt management are critical factors to monitor. Despite these risks, Hecla Mining's valuation misalignment is stark, but its operational progress and strategic assets argue that the current $6.11 price could be a temporary overhang.

For investors with a 2–3 year horizon, the $5.00–$5.50/share level (a 10%–18% pullback from current prices) presents a compelling entry point. The Libby Project's timeline and silver price dynamics will be critical in the next 12–18 months.

References:
[1] https://www.ainvest.com/news/hecla-mining-silver-lining-clouded-valuation-2507/
[2] https://www.gurufocus.com/news/2978679/hecla-mining-hl-receives-target-price-boost-from-cibc-analyst-hl-stock-news
[3] https://finance.yahoo.com/news/hecla-mining-hl-run-higher-162002129.html