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Hudbay Minerals Inc (TSE:HBM)
TSX:HBM
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Hudbay Minerals
(TSX:HBM)72Outperform
Positive Factors
Permitting and Growth Opportunities
HudBay has received the Air Quality Permit for Phase 1 of its Copper World project in Arizona, de-risking the project from a permitting perspective.
Production and Cost Guidance
2024 production guidance for all metals was reiterated while 2024 cash cost guidance was improved.
Valuation and Financial Performance
The stock trading at 0.87x NAV and a 16% FCF yield is considered compelling.
Negative Factors
Copper Production
Copper production of 29kt was below the estimate of 32kt, driven by lower than expected production from Peru.
Earnings Performance
Hudbay Minerals (HBM) reported a Q2’24 earnings miss with adjusted EPS at nil.
Project Execution
Projects are on track with key remaining Copper World state permits expected this year.
Hudbay Minerals (HBM) vs. S&P 500 (SPY)
Market Cap
$3.95B
Dividend Yield0.21%
Average Volume (3M)1.99M
Price to Earnings (P/E)35.9
Beta (1Y)2.16
Revenue Growth42.67%
EPS Growth718.35%
CountryCA
Employees2,462
SectorBasic Materials
Sector Strength56
IndustryMining
Share Statistics
EPS (TTM)0.27
Shares Outstanding394,944,500
10 Day Avg. Volume2,906,559
30 Day Avg. Volume1,992,648
Financial Highlights & Ratios
PEG Ratio3.88
Price to Book (P/B)N/A
Price to Sales (P/S)1.37
Price to Cash Flow (P/CF)2.90
P/FCF Ratio4.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$14.99Price Target Upside49.89% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Hudbay Minerals Business Overview & Revenue Model
Company DescriptionHudBay Minerals, Inc. operates as a mining company, which engages in the production of copper concentrate, molybdenum concentrate and zinc metal. It focuses on the discovery, production, and marketing of base and precious metals. The company was founded on January 16, 1996 and is headquartered in Toronto, Canada.
How the Company Makes MoneyHudbay Minerals generates revenue primarily through the extraction and sale of base and precious metals such as copper, zinc, gold, and silver. The company's key revenue streams are derived from its mining operations, where it explores, develops, and operates mines to produce these metals. Once extracted, the metals are sold in the global market, where prices are influenced by supply and demand dynamics, geopolitical factors, and economic trends. Hudbay also engages in long-term contracts and spot sales, contributing to its earnings. Significant partnerships with other mining companies and local stakeholders, along with operational efficiencies and cost management strategies, play a crucial role in enhancing the company's profitability.
Hudbay Minerals Financial Statement Overview
Summary
Hudbay Minerals exhibits strong revenue and cash flow growth, supported by improving profitability and a stable balance sheet. While leverage management is effective, profitability metrics such as ROE suggest opportunities for enhancement. Overall, the financial position is solid with potential for future growth.Income Statement
Hudbay Minerals has shown a solid revenue growth with a 20.60% increase from 2022 to 2023 and a further 20.63% increase in TTM. The gross profit margin in TTM is 27.77%, indicating effective cost management. The net profit margin has improved to 4.23% in TTM, reflecting better operational efficiency. However, volatility in net income in previous years could indicate some operational risks.75
Positive
Balance Sheet
The company maintains a healthy equity ratio of 46.06% in TTM, demonstrating a stable capital structure. The debt-to-equity ratio has decreased, indicating improved leverage management. However, the return on equity stands at 3.40% in TTM, suggesting room for improvement in profitability.70
Positive
Cash Flow
Hudbay Minerals has achieved a substantial free cash flow growth of 64.54% from 2022 to 2023, with a strong operating cash flow to net income ratio of 7.57 in TTM. This indicates robust cash generation relative to earnings, although fluctuations in capital expenditures and financing activities may pose potential risks.78
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.04B | 1.69B | 1.46B | 1.50B | 1.09B | 1.24B | Gross Profit |
| 566.12M | 784.22M | 276.89M | 131.02M | 39.00M | 151.54M | EBIT |
| 392.08M | 297.17M | 128.05M | -63.00M | -136.18M | -17.23M | EBITDA |
| 752.75M | 621.10M | 502.54M | 296.77M | 267.23M | 329.40M | Net Income Common Stockholders |
| 86.25M | 66.37M | 70.38M | -244.36M | -144.58M | -343.81M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 285.01M | 250.52M | 225.66M | 270.99M | 439.13M | 396.15M | Total Assets |
| 5.23B | 5.31B | 4.33B | 4.62B | 4.67B | 4.46B | Total Debt |
| 1.37B | 1.38B | 1.25B | 1.26B | 1.20B | 1.07B | Net Debt |
| 1.09B | 1.13B | 1.02B | 987.29M | 760.05M | 671.06M | Total Liabilities |
| 3.02B | 3.11B | 2.75B | 3.14B | 2.97B | 2.61B | Stockholders Equity |
| 2.11B | 2.10B | 1.57B | 1.48B | 1.70B | 1.85B |
| Cash Flow | Free Cash Flow | ||||
| 322.15M | 195.75M | 178.84M | 6.38M | -121.70M | 51.65M | Operating Cash Flow |
| 653.40M | 476.85M | 487.80M | 383.82M | 239.48M | 310.86M | Investing Cash Flow |
| -366.50M | -271.78M | -337.67M | -375.00M | -359.02M | -292.37M | Financing Cash Flow |
| -90.33M | -182.39M | -196.30M | -175.90M | 162.09M | -137.78M |
Hudbay Minerals Technical Analysis
Negative
10.00
Price Trends
11.96
Negative
12.30
Negative
11.96
Negative
Market Momentum
-0.64
Positive
33.43
Neutral
14.03
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HBM, the sentiment is Negative. The current price of 10 is below the 20-day moving average (MA) of 11.63, below the 50-day MA of 11.96, and below the 200-day MA of 11.96, indicating a bearish trend. The MACD of -0.64 indicates Positive momentum. The RSI at 33.43 is Neutral, neither overbought nor oversold. The STOCH value of 14.03 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:HBM.
Hudbay Minerals Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Performance Comparison
TSE:HBM
Hudbay Minerals
10.68
2.27
26.95%
TECK
Teck Resources
41.54
2.62
6.73%
LUNMF
Lundin Mining
8.42
0.20
2.43%
IVPAF
Ivanhoe Mines
10.11
-0.59
-5.51%
CSCCF
Capstone Copper
5.76
0.30
5.49%
FQVLF
First Quantum Minerals
12.89
2.98
30.07%
Hudbay Minerals Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -21.18% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call highlights strong financial performance, record production, and significant debt reduction, indicating a positive outlook for Hudbay Minerals. However, challenges in Peru and British Columbia operations present some concerns. Despite these challenges, the company's achievements and strategic advancements, such as the Copper World project, contribute to an overall positive sentiment.Highlights
Record Financial Performance
Hudbay Minerals achieved record financial performance in 2024 with revenues exceeding $2 billion and free cash flow generation over $350 million, driven by strong operational results and disciplined capital allocation.
Gold Production Exceeds Guidance
Manitoba operations achieved record annual gold production, increasing by 14% from 2023, and exceeding the top end of production guidance range. Gold production represented 35% of total revenues in 2024, compared to 29% in 2023.
Debt Reduction and Balance Sheet Transformation
Hudbay Minerals reduced debt by over $500 million in 2024, transforming its balance sheet to the lowest leverage position among its peers. The company ended the year with $582 million in cash and cash equivalents.
Copper World Project Progress
The Copper World project in Arizona received final key permits and is advancing through feasibility studies with a minority joint venture partner process.
Strong EBITDA Growth
Fourth quarter adjusted EBITDA was $257 million, a 25% increase compared to the prior quarter, resulting in full-year 2024 adjusted EBITDA of $823 million, a substantial increase from $648 million a year ago.
Lowlights
Reduced 2025 Production Guidance in Peru
2025 production guidance in Peru reduced due to more mining dilution than ore losses than planned in Pampacancha, affecting copper and gold production expectations.
Challenges in British Columbia Operations
Full-year copper production in British Columbia was below the guidance range due to lower grades in stockpiled ore and lower throughput during the ramp-up of stabilization and optimization efforts.
Company Guidance
In Hudbay Minerals Inc.'s 2024 fourth quarter results conference call, the company announced significant achievements and provided detailed guidance for 2025. The company reported record revenues of over $2 billion and free cash flow generation exceeding $350 million for 2024. Notably, Hudbay achieved consolidated production guidance for all metals, with gold production surpassing the top end of the guidance range. The company's operations in Peru and Manitoba contributed to the strong performance, with Manitoba achieving record annual gold production, a 14% increase from 2023. Hudbay reduced its debt by more than $500 million in 2024, resulting in a net debt of $526 million by year-end and improving its net debt to adjusted EBITDA ratio to 0.6 times, down from 1.6 times at the end of 2023. For 2025, Hudbay expects consolidated copper production to remain stable at about 133,000 tons, with gold production projected at 278,000 ounces. Cash costs for copper are anticipated to be within $0.80 to $1.00 per pound, with all-in sustaining costs between $2.60 and $2.65 per pound. Capital expenditures for 2025 are forecasted at $485 million, reflecting higher growth and sustaining capital investments across its operations. Hudbay is also advancing its Copper World project in Arizona, which has received key permits and is expected to increase copper production by 50% upon completion.Hudbay Minerals Corporate Events
Hudbay Minerals Advances with Copper World Project
Jan 2, 2025
Hudbay Minerals has secured the final Air Quality Permit for its Copper World project, marking a major step forward in its development. This project is poised to significantly boost Hudbay’s copper production and contribute to the U.S. supply chain with its substantial capital investment. Copper World aims to meet the growing demand for critical minerals in the U.S. by producing Made-in-America copper cathodes.
Hudbay Minerals Reports Strong Q3 with Record Gold Output
Nov 13, 2024
Hudbay Minerals reported a strong third quarter in 2024 with record gold production in Manitoba and improved cost guidance. The company achieved significant free cash flow generation, driven by enhanced operations and higher metal prices, positioning itself for continued growth. Hudbay reaffirmed its 2024 production guidance, with expectations for gold production to exceed previous forecasts.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.