New Gold (NGD) Stock Down on Slumping Gold Prices
NEW YORK (TheStreet) -- New Gold (NGD) - Get Report stock is falling by 4.29% to $2.23 in late afternoon trading on Thursday, as the price of gold fell to its lowest level since 2010.
Gold prices decreased due to heightened expectations that the Federal Reserve will raise interest rates in December, Reuters reports.
The precious metal struggles to compete with interest-bearing assets.
"We expect prices to fall a little bit further because of the anticipated rate hike by the Fed in December," Capital Economics analyst Simona Gambarini told Reuters.
Gold for December delivery is declining by 0.12% to $1,083.60 per ounce on the COMEX this afternoon.
New Gold is a gold mining company based in Canada.
Separately, TheStreet Ratings team rates NEW GOLD INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate NEW GOLD INC (NGD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 reported poor results of -$0.95 versus -$0.38 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 164.8% when compared to the same quarter one year ago, falling from -$59.60 million to -$157.80 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, NEW GOLD INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $51.00 million or 12.37% 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 -55.73%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 158.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: NGD
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.