Hecla Mining Shares Surged: What You Need to Know

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Silver miner Hecla Mining (NYS: HL) is looking extra shiny today, with its shares up 11% after reporting fourth-quarter results and boosting its spending outlook for 2012.

So what: For the quarter, Hecla reported a profit of $0.07 versus a loss in the year-ago period of $0.05. Revenue fell by 23% to $102.9 million. The real story, though, is the company's 37% increase in capital expenditures to $140 million, which signifies the company's overall belief that silver prices are likely to rise substantially in fiscal 2012. The primary increase was seen at its Greens Creek mine in Alaska, where Hecla plans to spend $90 million.

Now what: Much of the silver sector looks like a potential value. I can't say that Hecla is my favorite play of the bunch, even with the fact that it's trading at only 14 times forward earnings, but it could be worth a spot on my watchlist. My concern is that Hecla's profits are extremely dependent on silver prices staying north of $30 and that's no guarantee -- especially since Hecla lowered its production forecast back in January. For now I'll add it to my watchlist and watch patiently from the sidelines.

Craving more input? Start by addingHecla Mining to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement