NEW YORK (TheStreet) -- Shares of New Gold Inc (NGD) - Get New Gold Inc. Report are slipping, down 3.62% to $3.46 in afternoon trading, as gold prices hit a four-year low of $1,143.76 per ounce today.
The gold price is now below production costs for six of 19 mining companies tracked by Bloomberg including Harmony Gold Mining Co. (HMY) - Get Harmony Gold Mining Co. Ltd. Report , South Africa's third-largest producer, and Primero Mining Corp. (PPP) .
Gold prices had been sharply falling in recent weeks raising the prospect of another round of dividend cuts from mining companies if prices hover around $1,100 an ounce, Bloomberg reports.
New Gold is an integrated mining company engaged in acquisition, exploration, extraction, processing and reclamation with operating assets in the U.S., Mexico, and Australia.
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 and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NEW GOLD INC reported flat earnings per share in the most recent quarter. 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.
- 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 has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- NGD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 38.05%, which is also worse than the performance of the S&P 500 Index. 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.
- NGD, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- 46.49% is the gross profit margin for NEW GOLD INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.09% trails the industry average.
- You can view the full analysis from the report here: NGD Ratings Report