Stock To Watch: New Gold (NGD) In Perilous Reversal

Trade-Ideas LLC identified New Gold ( NGD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified New Gold as such a stock due to the following factors:

  • NGD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.4 million.
  • NGD has traded 1.8 million shares today.
  • NGD is down 3% today.
  • NGD was up 7.8% yesterday.

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More details on NGD:

New Gold, Inc., a gold mining company, engages in the acquisition, exploration, development, and operation of mineral properties. It primarily explores for gold, silver, and copper deposits. Currently there are 2 analysts that rate New Gold a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for New Gold has been 4.6 million shares per day over the past 30 days. New has a market cap of $2.1 billion and is part of the basic materials sector and metals & mining industry. Shares are up 91% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates New Gold as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to $61.50 million or 11.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite the weak revenue results, NGD has significantly outperformed against the industry average of 45.0%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • NEW GOLD INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, NEW GOLD INC continued to lose money by earning -$0.40 versus -$0.95 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 161.2% when compared to the same quarter one year prior, rising from -$43.80 million to $26.80 million.

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