Depending on how you slice it, Hecla Mining Company (NYSE:HL) is either on a tear or stuck in a long-term cycle of underwhelming performance. The mining stock rewarded investors with 177% gains in 2016, but hasn't been the best investment for building wealth over longer periods of time. The stock is down 40% in the last decade.

Despite the long-term woes, investors are setting their sights on future potential. Is this time really different? Well, the mining stock improved margins handsomely last year and is promising further improvements in 2017. It owns some of the lowest-cost reserves in the industry -- just as precious-metals prices are trekking higher. But given the underperformance of mining stocks as a whole, is it time to move on from Hecla Mining stock?

A woman weighing her options.

Image source: Getty Images.

What's up with the underwhelming performance?

In the last five years, the S&P 500 has run laps around Hecla Mining stock.

HL Total Return Price Chart

HL Total Return Price data by YCharts.

Most of that can be explained by poor margins. And since margins are key to evaluating the future potential of the company, it's worth revisiting recent history.

In 2012, the company's silver and gold reserve prices were $26.50 per ounce and $1,400 per troy ounce, respectively. Unfortunately, market selling prices quickly deteriorated from 2012 onward. Hecla Mining managed to grow revenue and reduce costs over time, but it proved difficult to reduce reserve prices at the same pace selling prices were falling. It posted losses in 2013 and 2015, and managed earnings per share of only $0.05 for all of 2014.  

Then again, stock performance may just be a matter of perspective. Hecla Mining stock is leading most of its precious-metal mining peers in the last five-year period. It's even beating the returns of Royal Gold, a streaming company that isn't exposed to costly and risky mining operations. That's surprising.

HL Total Return Price Chart

HL Total Return Price data by YCharts.

In other words, investors should be aware that mining stocks as a whole haven't performed very well when compared to the S&P 500. It may be better to look elsewhere for more sustainable returns and growth. But if you already own Hecla Mining, then you still need to know whether it's time to move on.

What's ahead for Hecla Mining stock?

The mad dash to reduce costs in recent years may be about to pay off. In 2016, Hecla Mining reported that its average silver and gold reserve prices were $14.50 and $1,200 per troy ounce, respectively. Those were the lowest and fourth-lowest reserve prices, respectively, in the industry, according to the company's June 2017 investor update. 

That should enable profitable sales given current market selling prices for both silver and gold, even with the recent pullback in June and July. Indeed, the company's cash margins for silver in the first quarter of 2017 were the highest they've been since the start of 2016.

New York Silver Price Chart

New York Silver Price data by YCharts.

The concerted effort to reduce operating costs and improve efficiency have had a big impact on operating income and net income. Hecla Mining has achieved at least $20 million in net income for four straight quarters dating back to the second quarter of 2016.

The same trend can be seen in operating cash flow. The metric has improved from $26 million in 2013 to $225 million in 2016. Better yet, the trailing-12-month operating cash flow is now approaching historical highs set in 2011 -- when silver and gold prices soared to all-time highs. 

HL Chart

HL data by YCharts.

All around, Hecla Mining is the strongest it's been in years. If silver and gold prices hold or head higher in the next few years, then the stock could head higher to match the company's performance.

Is it time to move on?

As a whole, precious-metals mining stocks haven't been able to match the long-term performance of the S&P 500. Investors can clearly do better, so I wouldn't consider starting a position in the sector. That said, if you already own Hecla Mining, then now would be a terrible time to sell. The company is performing well by most metrics that matter to shareholders and on the path to achieve further improvements in the year ahead. Barring a collapse in silver or gold prices, I think investors should expect the stock to head higher in the short and medium term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.