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Should New Gold (TSE:NGD) Be Disappointed With Their 53% Profit?


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Should New Gold (TSE:NGD) Be Disappointed...

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The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. For example, the New Gold Inc. (TSE:NGD) share price is up 53% in the last year, clearly besting the market decline of around 7.0% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 46% in the last three years.

Check out our latest analysis for New Gold

Because New Gold made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn’t make profits, we’d generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year New Gold saw its revenue shrink by 7.9%. Despite the lack of revenue growth, the stock has returned a solid 53% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on New Gold

A Different Perspective

We’re pleased to report that New Gold shareholders have received a total shareholder return of 53% over one year. Notably the five-year annualised TSR loss of 3.4% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we’ve identified 1 warning sign for New Gold that you should be aware of.

New Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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 [email protected]

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Should New Gold (TSE:NGD) Be Disappointed With Their 53% Profit?The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by…


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