Reviewing New Gold (NYSE:NGD) & Amerigo Resources (OTCMKTS:ARREF)

Amerigo Resources (OTCMKTS:ARREF) and New Gold (NYSE:NGD) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, earnings, valuation, dividends and profitability.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Amerigo Resources and New Gold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amerigo Resources	0	0	0	0	N/A
New Gold	0	2	3	2	3.00

New Gold has a consensus target price of $2.74, indicating a potential downside of 6.27%. Given New Gold’s higher probable upside, analysts plainly believe New Gold is more favorable than Amerigo Resources.

Valuation & Earnings

This table compares Amerigo Resources and New Gold”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amerigo Resources	$157.46 million	1.32	$3.38 million	($0.01)	-125.50
New Gold	$810.80 million	2.85	-$64.50 million	($0.10)	-29.25

Amerigo Resources has higher earnings, but lower revenue than New Gold. Amerigo Resources is trading at a lower price-to-earnings ratio than New Gold, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

42.8% of New Gold shares are held by institutional investors. 19.3% of Amerigo Resources shares are held by company insiders. Comparatively, 0.2% of New Gold shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Amerigo Resources has a beta of 3.02, meaning that its stock price is 202% more volatile than the S&P 500. Comparatively, New Gold has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Profitability

This table compares Amerigo Resources and New Gold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Amerigo Resources	7.16%	11.50%	6.08%
New Gold	-2.53%	5.22%	2.03%

About Amerigo Resources

Amerigo Resources Ltd., through its subsidiary, Minera Valle Central S.A., engages in the production and sale of copper and molybdenum concentrates from Codelco's El Teniente underground mine in Chile. The company was formerly known as Golden Temple Mining Corp. and changed its name to Amerigo Resources Ltd. in March 2002. The company was incorporated in 1984 and is headquartered in Vancouver, Canada.

About New Gold

New Gold Inc., an intermediate gold mining company, develops and operates of mineral properties in Canada. It primarily explores for gold, silver, and copper deposits. The company’s principal operating properties include 100% interest in the Rainy River mine located in Northwestern Ontario, Canada; and New Afton project situated in South-Central British Columbia. New Gold Inc. is headquartered in Toronto, Canada.