Hecla Mining (HL) Stock Tanking Amid Gold Price Decline

Hecla Mining (HL) stock is falling along with gold prices today.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Shares of Hecla Mining (HL) - Get Report are down by 5.45% to $2 in early afternoon trading on Friday, as gold prices tumble today taking some mining and metals stocks along for the ride.

The price of the precious metal is trading in the red following strong U.S. jobs growth data, which is upping the likelihood the Federal Reserve will raise interest rates in December.

Hecla Mining is a Coeur d'Alene, ID-based company engaged in the discovery, acquisition, development and production of gold, silver, lead and zinc.

For October, nonfarm payrolls increased by 271,000, the biggest gain since December 2014, Reuters reports. The unemployment rate declined to 5%, the lowest level since April 2008.

"With numbers like these, the Fed are almost duty bound to raise rates within this year," Mitsubishi metals analysts Jonathan Butler told Reuters

Higher interest rates can weigh on gold as the metal struggles to compete against interest bearing assets.

Gold for December delivery is slipping by 1.44% to $1,088.30 per ounce on the COMEX this afternoon.

Separately, TheStreet Ratings team rates HECLA MINING CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate HECLA MINING CO (HL) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 369.0% when compared to the same quarter one year ago, falling from $3.68 million to -$9.89 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, HECLA MINING CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for HECLA MINING CO is rather low; currently it is at 24.07%. It has decreased significantly from the same period last year.
  • HECLA MINING CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HECLA MINING CO turned its bottom line around by earning $0.05 versus -$0.08 in the prior year. For the next year, the market is expecting a contraction of 300.0% in earnings (-$0.10 versus $0.05).
  • Despite the weak revenue results, HL has outperformed against the industry average of 45.7%. Since the same quarter one year prior, revenues fell by 22.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: HL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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