Hochschild Mining (LSE:HOC) - Share price, News & Analysis

Q: What is the Fair Price of HOC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

HOC (£0.95) is trading above our estimate of [[fair value]] (£0.6)

HOC fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	5/6
Financial Health	6/6
Dividends	3/6

HOC Stock Overview

Hochschild Mining plc, a precious metals company, engages in the exploration, mining, processing, and sale of gold and silver in the Americas.

Rewards

Price-To-Earnings ratio (7.7x) is below the UK market (13.8x)

Earnings are forecast to grow 8.56% per year

Earnings grew by 407.4% over the past year

Risk Analysis

Unstable dividend track record

Hochschild Mining Competitors

Pan African Resources

AIM:PAF

UK£384.5m

Centamin

LSE:CEY

UK£891.5m

Polymetal International

LSE:POLY

UK£885.7m

Ariana Resources

AIM:AAU

UK£41.6m

Price History & Performance

Summary of all time highs, changes and price drops for Hochschild Mining
Historical stock prices
Current Share Price	UK£0.95
52 Week High	UK£1.76
52 Week Low	UK£0.68
Beta	1.27
1 Month Change	-14.82%
3 Month Change	-28.65%
1 Year Change	-40.82%
3 Year Change	-50.52%
5 Year Change	-62.54%
Change since IPO	-73.13%

Recent News & Updates

Mar 14

Hochschild Mining plc (LON:HOC) Shares Could Be 31% Below Their Intrinsic Value Estimate

Today we will run through one way of estimating the intrinsic value of Hochschild Mining plc ( LON:HOC ) by projecting...

Shareholder Returns

	HOC	GB Metals and Mining	GB Market
7D	-9.1%	-4.4%	-1.1%
1Y	-40.8%	-13.2%	-9.7%

Return vs Industry: HOC underperformed the UK Metals and Mining industry which returned -13.2% over the past year.

Return vs Market: HOC underperformed the UK Market which returned -9.7% over the past year.

Price Volatility

Is HOC's price volatile compared to industry and market?
HOC volatility
HOC Average Weekly Movement	6.2%
Metals and Mining Industry Average Movement	7.7%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.6%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: HOC is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: HOC's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1911	3,663	Ignacio Bustamante	https://www.hochschildmining.com

Hochschild Mining plc, a precious metals company, engages in the exploration, mining, processing, and sale of gold and silver in the Americas. It holds 100% interests in the Inmaculada gold/silver underground operation and Pallancata silver/gold property, which are located in the Department of Ayacucho in southern Peru. The company also holds a 51% interest in the San Jose silver/gold mine located in Argentina.

Hochschild Mining Fundamentals Summary

How do Hochschild Mining's earnings and revenue compare to its market cap?
HOC fundamental statistics
Market Cap	US$589.76m
Earnings (TTM)	US$76.93m
Revenue (TTM)	US$811.39m

7.7x

P/E Ratio

0.7x

P/S Ratio

Is HOC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
HOC income statement (TTM)
Revenue	US$811.39m
Cost of Revenue	US$486.32m
Gross Profit	US$325.07m
Other Expenses	US$248.13m
Earnings	US$76.93m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.15
Gross Margin	40.06%
Net Profit Margin	9.48%
Debt/Equity Ratio	39.6%

How did HOC perform over the long term?

See historical performance and comparison

Dividends

3.7%

Current Dividend Yield

29%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is HOC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HOC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for HOC. This is calculated by dividing HOC's market cap by their current preferred multiple.
What is HOC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$589.76m

HOC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.7x
Enterprise Value/EBITDA	1.7x
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does HOC's PE Ratio compare to its peers?

HOC PE Ratio vs Peers

The above table shows the PE ratio for HOC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	7.1x
PAF Pan African Resources	5.8x	7.7%	UK£384.5m
CEY Centamin	10.6x	6.2%	UK£891.5m
POLY Polymetal International	1.2x	15.3%	UK£885.7m
AAU Ariana Resources	10.8x	-1.3%	UK£41.6m
HOC Hochschild Mining	7.7x	8.6%	UK£490.2m

Forward PE

Price-To-Earnings vs Peers: HOC is expensive based on its Price-To-Earnings Ratio (7.7x) compared to the peer average (7.1x).

Price to Earnings Ratio vs Industry

How does HOC's PE Ratio compare vs other companies in the GB Metals and Mining Industry?

Price-To-Earnings vs Industry: HOC is expensive based on its Price-To-Earnings Ratio (7.7x) compared to the UK Metals and Mining industry average (5.8x)

Price to Earnings Ratio vs Fair Ratio

What is HOC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HOC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	7.7x
Fair PE Ratio	12.1x

Price-To-Earnings vs Fair Ratio: HOC is good value based on its Price-To-Earnings Ratio (7.7x) compared to the estimated Fair Price-To-Earnings Ratio (12.1x).

Share Price vs Fair Value

What is the Fair Price of HOC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HOC (£0.95) is trading above our estimate of fair value (£0.6)

Significantly Below Fair Value: HOC is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: HOC is good value based on its PEG Ratio (0.9x)

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Future Growth

How is Hochschild Mining forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

8.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: HOC's forecast earnings growth (8.6% per year) is above the savings rate (0.9%).

Earnings vs Market: HOC's earnings (8.6% per year) are forecast to grow slower than the UK market (10.9% per year).

High Growth Earnings: HOC's earnings are forecast to grow, but not significantly.

Revenue vs Market: HOC's revenue (0.2% per year) is forecast to grow slower than the UK market (4.1% per year).

High Growth Revenue: HOC's revenue (0.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: HOC's Return on Equity is forecast to be low in 3 years time (18%).

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Past Performance

How has Hochschild Mining performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

4.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HOC has high quality earnings.

Growing Profit Margin: HOC's current net profit margins (9.5%) are higher than last year (2.4%).

Past Earnings Growth Analysis

Earnings Trend: HOC has become profitable over the past 5 years, growing earnings by 4.5% per year.

Accelerating Growth: HOC's earnings growth over the past year (407.4%) exceeds its 5-year average (4.5% per year).

Earnings vs Industry: HOC earnings growth over the past year (407.4%) exceeded the Metals and Mining industry 42.5%.

Return on Equity

High ROE: HOC's Return on Equity (9.4%) is considered low.

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Financial Health

How is Hochschild Mining's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: HOC's short term assets ($519.8M) exceed its short term liabilities ($188.4M).

Long Term Liabilities: HOC's short term assets ($519.8M) exceed its long term liabilities ($506.9M).

Debt to Equity History and Analysis

Debt Level: HOC has more cash than its total debt.

Reducing Debt: HOC's debt to equity ratio has reduced from 41.2% to 39.6% over the past 5 years.

Debt Coverage: HOC's debt is well covered by operating cash flow (94.7%).

Interest Coverage: HOC's interest payments on its debt are well covered by EBIT (17.1x coverage).

Balance Sheet

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Dividend

What is Hochschild Mining current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.74%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: HOC's dividend (3.74%) is higher than the bottom 25% of dividend payers in the UK market (1.89%).

High Dividend: HOC's dividend (3.74%) is low compared to the top 25% of dividend payers in the UK market (5.29%).

Stability and Growth of Payments

Stable Dividend: HOC's dividend payments have been volatile in the past 10 years.

Growing Dividend: HOC's dividend payments have fallen over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (28.6%), HOC's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (16.7%), HOC's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

8.9yrs

Average management tenure

CEO

Ignacio Bustamante (50 yo)

12.25yrs

Tenure

US$1,995,000

Compensation

Mr. Ignacio Bustamante serves as a Non-Executive Director at Aclara Resources Inc. since October 15, 2021. He has been the Chief Executive Officer at Hochschild Mining PLC since April 2010. Mr. Bustamante...

CEO Compensation Analysis

Compensation vs Market: Ignacio's total compensation ($USD2.00M) is above average for companies of similar size in the UK market ($USD1.06M).

Compensation vs Earnings: Ignacio's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: HOC's management team is seasoned and experienced (8.9 years average tenure).

Board Members

Experienced Board: HOC's board of directors are considered experienced (5.7 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/07/01 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31