NEW YORK (TheStreet) -- Shares of Hecla Mining Company (HL - Get Report) are sinking 5.7% to $2.48 in after-hours trading following the company's announcement that it entered into an agreement to acquire 3,095,238 units of Canadian company Canamex Resources (CNMXF) .
With the completion of the deal, Hecla will gain control over 17,237,149 common shares, which represents 13.3% of the outstanding Canamex common stock and 1,547,619 common share purchase warrants.
Hecla Mining is a low-cost U.S. silver producer with operating mines in Alaska, Idaho and Quebec, Canada.
Separately, TheStreet Ratings team rates HECLA MINING CO as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HECLA MINING CO (HL) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 37.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, HL has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
- HECLA MINING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HECLA MINING CO swung to a loss, reporting -$0.08 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.08).
- HL has underperformed the S&P 500 Index, declining 16.41% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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.
- You can view the full analysis from the report here: HL Ratings Report