NGD

We rate New Gold Inc. /FI (NGD) as a Buy with a composite score of 69.9/100 at a current price of $12.25. The stock scores above average across the majority of our six quantitative factors and ranks #94 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (92th percentile) and quality (76th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Wide Moat rating (78/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

New Gold Inc. /FI holds a top-quartile position (#9 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 69.9/100 places it at rank #94 in our full 7,333-stock universe. At $1.7B in market capitalization, New Gold Inc. /FI is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 18% and momentum in the 92th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 58th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 53% (+9.6pp vs sector) narrow to operating margins of 20% (+7.5pp vs sector) and net margins of 11.1%, yielding a gross-to-net conversion rate of 21%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $12.25, New Gold Inc. /FI is trading near fair value based on current fundamentals. Our value factor score of 67/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 86.6x (a 531% premium to the sector median of 13.7x), EV/EBITDA of 7.3x (at a premium), P/B of 9.2x, P/S of 2.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to New Gold Inc. /FI. The company exhibits strong financial stability with a beta of 0.69, conservative leverage (38% D/E), and a stability factor in the 48th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.69 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 86.6x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 48th percentile and quality factor at the 76th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 53% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate New Gold Inc. /FI's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 39.0%, and the balance sheet is managed within acceptable parameters (D/E: 38%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; New Gold Inc. /FI falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, New Gold Inc. /FI receives a Buy rating with a composite score of 69.9/100 (rank #94 of 7,333). Our quantitative framework assigns a Wide Moat (78/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 68/100.

Our analysis supports a constructive view on New Gold Inc. /FI. The combination of a wide competitive moat, low uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.