Skip to main content

NEW YORK (TheStreet) -- Shares of New Gold (NGD) - Get Free Report are increasing 4.22% to $2.47 in early afternoon trading on Thursday, as gold prices continue to gain after hitting a one-month high on Wednesday.

Gold prices are benefiting from yesterday's release of the minutes from the Fed's July meeting, which showed the central bank remains unsure about whether to hike interest rates in September.

"The minutes show the Fed was concerned about disinflationary pressures coming from China before China's move to allow its currency to depreciate," Axel Merk, CIO of Merk Investments, told Reuters.

Higher interest rates would negatively impact the price of gold by upping the relative cost of holding a non-interest bearing asset.

Gold for December delivery is up 2.05% to $1,151 per ounce on the COMEX this afternoon.

New Gold is an intermediate gold mining company based in Vancouver, 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 multiple weaknesses, 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, disappointing return on equity, weak operating cash flow, deteriorating net income and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NEW GOLD INC's earnings per share declined by 33.3% in the most recent quarter compared to 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.
  • 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 63.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% 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.
  • Net operating cash flow has declined marginally to $56.90 million or 4.04% 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 -43.14%.
  • The change in net income from the same quarter one year ago has exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 42.0% when compared to the same quarter one year ago, falling from $16.20 million to $9.40 million.
  • You can view the full analysis from the report here: NGD Ratings Report