New Gold (NGD) Stock Falls Amid Tumbling Gold Prices

NEW YORK (TheStreet) -- Shares of New Gold Inc  (NGD) are falling, down 5.28% to $3.05 on heavy volume in later afternoon trading Tuesday, as gold prices retreat on a strengthening dollar.

Spot gold reached a two-week low of $1,185.35 an ounce earlier today, and was last down 1.58% to $1,187.73 an ounce as of 3:17 p.m. ET today.

U.S. gold futures for June delivery was similarly down 1.35% to $1,187.80 an ounce as of 3:07 pm. ET.

The dollar is strengthening after the release of strong U.S. data along with recent comments from Federal Reserve Chair Janet Yellen suggesting interest rates will be raised this year, according to Reuters.

A stronger dollar makes gold more expensive for holders of other currencies, Reuters noted.

Data showed that U.S. business investment spending plans rose for a second straight month in April, Reuters added.

About 3.97 million shares of New Gold exchanged hands as of 3:16 p.m. ET today, compared to its average trading volume of about 3.1 million shares a day.

Canada-based 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 a few notable 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, deteriorating net income, disappointing return on equity and weak operating cash flow."

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

  • NEW GOLD INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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 2333.3% when compared to the same quarter one year ago, falling from -$1.80 million to -$43.80 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 $69.80 million or 14.25% 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 -38.30%.
  • This stock's share value has moved by only 36.80% over the past year. 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 Ratings Report

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