U.S. markets closed
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • Dow 30

    34,584.88
    -166.44 (-0.48%)
     
  • Nasdaq

    15,043.97
    -137.96 (-0.91%)
     
  • Russell 2000

    2,236.87
    +3.96 (+0.18%)
     
  • Crude Oil

    71.96
    -0.65 (-0.90%)
     
  • Gold

    1,753.90
    -2.80 (-0.16%)
     
  • Silver

    22.36
    -0.43 (-1.90%)
     
  • EUR/USD

    1.1732
    -0.0040 (-0.34%)
     
  • 10-Yr Bond

    1.3700
    +0.0390 (+2.93%)
     
  • GBP/USD

    1.3737
    -0.0059 (-0.43%)
     
  • USD/JPY

    109.8950
    +0.1770 (+0.16%)
     
  • BTC-USD

    47,709.75
    -726.99 (-1.50%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.62%)
     
  • FTSE 100

    6,963.64
    -63.84 (-0.91%)
     
  • Nikkei 225

    30,500.05
    +176.71 (+0.58%)
     

New Gold Inc.'s (TSE:NGD) About To Shift From Loss To Profit

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

We feel now is a pretty good time to analyse New Gold Inc.'s (TSE:NGD) business as it appears the company may be on the cusp of a considerable accomplishment. New Gold Inc., an intermediate gold mining company, engages in the development and operation of mineral properties. The CA$1.5b market-cap company posted a loss in its most recent financial year of US$79m and a latest trailing-twelve-month loss of US$36m shrinking the gap between loss and breakeven. As path to profitability is the topic on New Gold's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for New Gold

New Gold is bordering on breakeven, according to the 8 Canadian Metals and Mining analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$122m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 11% is expected, which seems relatively fair. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for New Gold given that this is a high-level summary, however, keep in mind that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a double-digit growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with New Gold is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in New Gold's case is 57%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of New Gold to cover in one brief article, but the key fundamentals for the company can all be found in one place – New Gold's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

  1. Valuation: What is New Gold worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether New Gold is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on New Gold’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.