HBM

We rate Hudbay Minerals Inc. (HBM) as a Buy with a composite score of 67.0/100 at a current price of $27.82. The stock scores above average across the majority of our six quantitative factors and ranks #197 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (83th percentile) and value (82th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (62/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Hudbay Minerals Inc. holds an above-average position (#21 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.0/100 places it at rank #197 in our full 7,333-stock universe. At $3.1B in market capitalization, Hudbay Minerals Inc. is a mid-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 20% and momentum in the 83th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 51th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 27% (-15.8pp vs sector) narrow to operating margins of 20% (+7.6pp vs sector) and net margins of 3.4%, yielding a gross-to-net conversion rate of 12%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $27.82, Hudbay Minerals Inc. appears undervalued relative to its fundamentals. Our value factor score of 82/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 130.3x (a 849% premium to the sector median of 13.7x), EV/EBITDA of 3.8x (discounted to peers), P/B of 3.9x, P/S of 1.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Hudbay Minerals Inc.. The stock presents a balanced risk profile: elevated market sensitivity (beta of 1.47) and elevated valuation multiple (P/E 130.3x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.47); elevated valuation multiple (P/E 130.3x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 41th percentile and quality factor at the 73th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our medium uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Hudbay Minerals Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 10.6%, and the balance sheet is managed within acceptable parameters (D/E: 45%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Hudbay Minerals Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.22% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Hudbay Minerals Inc. receives a Buy rating with a composite score of 67.0/100 (rank #197 of 7,333). Our quantitative framework assigns a Narrow Moat (62/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 66/100.

Our analysis supports a constructive view on Hudbay Minerals Inc.. The combination of identifiable competitive advantages, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.