New Gold Inc.'s (TSE:NGD): New Gold Inc., an intermediate gold mining company, engages in the development and operation of mineral properties. With the latest financial year loss of -US$1.1b and a trailing-twelve month of -US$778.4m, the CA$915m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is NGD’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for NGD.
According to the 7 industry analysts covering NGD, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$52m in 2020. So, NGD is predicted to breakeven approximately a couple of months from now! What rate will NGD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 81%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving NGD’s growth isn’t the focus of this broad overview, but, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one issue worth mentioning. NGD currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in NGD’s case is 88%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of NGD which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NGD, take a look at NGD’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further examine:
- Valuation: What is NGD 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 NGD is currently mispriced by the market.
- 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 back ground.
- 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.
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