Hochschild, which was founded in 1911, is a UK-based precious metals company that operates gold and silver mines in Peru (Inmaculada), Argentina (San Jose), and Brazil (Mara Rosa), with additional projects in Peru, Argentina, Brazil, and Chile at various development stages.

In H1 2025, Hochschild Mining achieved a 6% increase in attributable production to 161,597 gold equivalent ounces, supported by strong performance at Inmaculada and San Jose, and a significant ramp-up at Mara Rosa despite operational challenges there. In addition, revenue rose 33% y/y to $520m, mainly driven by higher gold output and a 28% y/y increase in realized gold prices. The company reported operating income of $124.4m (up 29% y/y), and net profit of $66.5m, demonstrating resilient financials amid cost pressures and ongoing optimization at Mara Rosa.

Improved ROE

Hochschild posted strong performance over FY 21-24, achieving a revenue CAGR of 5.3%, reaching $948m in FY 25, driven by higher gold and silver prices and increased production volumes. EBITDA registered a CAGR of 6.3%, reaching $226m. Consequently, margins improved by 75bp to 23.8%.

Over FY 21-24, the company's cash from operations rose from $285m to $321m. In addition, ROA rose from 8.3% to 9.2% and ROE improved from 9.1% to 16.8%.

In comparison, Pan African Resources PLC, a local peer, reported a revenue CAGR of 12.8% over FY 21-24 to $540m in FY 24, while EBIT rose at CAGR of 21.5% to $205.7m, with its margin expanding from 28.9% to 38.1%.

Optimistic analyst opinions

Over the past 12 months, the company's stock has delivered strong returns of approximately 79.5%. In comparison, Pan African Resources' stock delivered higher returns of around 175.9% over the same period. The company paid an annual dividend of $0.02 in FY 24, resulting in a dividend yield of 0.7%.

Hochschild is currently trading at a P/E of 15.1x, based on the FY 25 estimated EPS of $0.3, which is lower than its 3-year historical average of 28.4x but higher than Pan African Resources' valuation of 7.3x. The company is currently trading at an EV/EBIT multiple of 8.3x, based on FY 25 estimated EBIT of $332.1m, which is lower than its 3-year historical average of 10.8x but higher than Pan African Resources (5.2x).

Hochschild is mostly liked by analysts who cover it, with nine having 'Buy' ratings and one having 'Hold' rating for an average target price of $5.9, implying 18.6% upside potential from the share's current market price.

Consensus expects EBIT to rise at a CAGR of 35.7% to $561m, with margins expanding from 23.7% to 40.1% over FY 24-27. In addition, net profit CAGR of 49.0% to $321m. Likewise, for Pan African Resources, analysts estimate an EBIT CAGR of 47.1% and a net profit CAGR of 44.1%.

Overall, Hochschild's resilient financial performance and optimistic analyst outlook underscore its growth potential and market credibility. With strong production and strategic asset management, Hochschild is well-positioned for future success compared to peers like Pan African Resources. However, the company faces operational, financial, and strategic risks, including Mara Rosa mine underperformance, cost inflation, production imbalance, forecast reliability issues, and geopolitical, ESG and logistical challenges.