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Alberto Abaterusso
Alberto Abaterusso
Articles (1703) 

2 Holdings Investors Should Consider Reducing

Wall Street sees Hecla Mining Co. and Owens & Minor Inc. continuing to underperform

September 17, 2019 | About:

As of Sept. 16, shareholders of the following two companies have more than one reason to feel disappointed about their stocks.

First, shares of these stocks have fallen far this year and over the past year and past five years.

Second, their dividends have either not grown or declined over the past five years.

Third, both the forward dividend yield and the trailing 12-month dividend yield are ranked lower than most of their peers and the S&P 500 index.

Fourth, these two stocks have received an underweight recommendation rating from sell-side analysts on Wall Street, increasing the odds that they will continue to produce negative margins in the coming weeks, as the rating means expectations of underperforming share price.

Thus, shareholders may want to consider the idea of reducing their holdings.

Shares of Hecla Mining Co. (NYSE:HL) have fallen 17% so far this year, 34.4% over the last 52 weeks and 28.7% over the last five years through Monday.

The cash quarterly dividend that the U.S. precious metals explorer and producer paid on Sept. 3 to its shareholders is a paltry 0.3 cents per common share, generating another insignificant trailing 12-month dividend per common share of 1.2 cents.

Based on the share price at close on Monday, Hecla Mining Co.’s forward dividend yield is 0.55% versus the industry median of 2.43% and trailing 12-month dividend yield is 0.52% versus the industry median of 2.15%.

The forward dividend yield is ranked lower than 234 out of 260 companies operating in the metals and mining industry.

The trailing 12-month dividend yield is ranked lower than 241 out of 272 companies operating in the metals and mining industry.

Forward and trailing yields are also topped by the S&P 500 index yield of 1.87% as of Monday.

Shares of Hecla Mining Co. have an underweight recommendation rating and an average target price of $2.05 reflecting a slight 4.6% upside within 52 weeks.

The miner closed at $1.96 per share on Monday for a market capitalization of $960.89 million.

The stock has a price-book ratio of 0.57 versus the industry median of 1.5 and an enterprise value-Ebitda ratio of 23.53 compared to the industry median of 8.72.

The 14-day relative strength index of 58 indicates the stock is neither oversold nor overbought.

GuruFocus assigned a moderate rating of 4.1 out of 10 for the company's financial strength and of 4 out of 10 for its profitability.

Shares of Owens & Minor Inc. (NYSE:OMI) have declined 5.2% year to date, 64.9% over the past year and 82.7% over the past five years through Monday.

The cash quarterly dividend that the U.S. health care solutions company paid on Sept. 30 to its shareholders was an unmeaningful 0.3 cents per common share, resulting in another insignificant dividend per common share of 1.2 cents calculated on a trailing 12-month basis.

Based on the share price at close on Monday, Owens & Minor’s forward dividend yield is 0.16% versus the industry median of 2.83% and trailing 12-month dividend yield is 1.38% compared to the industry median of 2.83%.

The forward dividend yield is ranked lower than 37 out of 37 companies operating in the medical distribution industry.

The trailing 12-month dividend yield is ranked lower than 30 out of 38 companies operating in the medical distribution industry.

Forward and trailing yields are also outperformed by the S&P 500 index yield of 1.87% as of Monday.

Analysts recommend investors reshape their holdings of Owens & Minor Inc. according to an underweight rating. Analysts have also produced estimates on the price target for shares of the U.S. health care solutions company of $4.47, reflecting 27% downside within 12 months.

Owens & Minor Inc.’s stock price closed at $6 per share on Monday for a market capitalization of $377.75 million.

The stock has a price-book ratio of 0.71 versus the industry median of 1.69 and a price-sales ratio of 0.04 versus the industry median of 0.58.

The 14-day relative strength index of 53 indicates the stock is neither oversold nor overbought.

GuruFocus assigned a moderate rating of 4.4 out of 10 for the company's financial strength and of 5 out of 10 for its profitability.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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