The firm did so "despite lowering our 12- month target price to C$7.50 from C$8.00. In our opinion, the correction in the share price has created an attractive entry point with the shares now more than pricing in the development risk with the Blackwater and El Morro projects."
"We like the forecast 39% return from current levels to our risk-adjusted target price and believe the shares (at current levels) should be attractive to investors for a number of reasons," they noted.
- NEW GOLD INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, NEW GOLD INC swung to a loss, reporting -$0.38 versus $0.41 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 305.6% when compared to the same quarter one year ago, falling from $123.90 million to -$254.70 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, NEW GOLD INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Net operating cash flow has declined marginally to $99.70 million or 6.12% when compared to the same quarter last year. Despite a decrease in cash flow NEW GOLD INC is still fairing well by exceeding its industry average cash flow growth rate of -39.72%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 296.15% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: NGD Ratings Report