Is New Gold's Share Price Rally in 2025 Justified After Impressive 153% Surge?

If you’re eyeing New Gold and wondering if it’s time to get in, hold, or take profits, you’re not alone. The stock has drawn intense interest lately, and for good reason. Just look at those numbers: New Gold has soared an incredible 153.4% since the start of the year, and its three-year return is an eye-popping 691.7%. Even with a recent pullback of 6.4% in the past week, the bigger picture reflects robust long-term gains and a sharp pivot in investor sentiment.

What’s behind these moves? Shifting market conditions have played a key role, as renewed optimism in the gold sector and changing risk appetites have both lifted the stock. For many, New Gold’s performance isn’t just about the commodity cycle; it’s also about how investors are reassessing its growth potential and risk profile. With a 30-day gain of 6.1% and a five-year return of 253.5%, the story here is clearly bigger than just a short-term bounce.

Now, for those with a valuation mindset, here’s a key stat: New Gold currently scores a 3 on our value scale, which means it’s undervalued in half of the six industry checks we use. But is that enough to call it a bargain, or is there more to the story? Let’s walk through the major valuation approaches and along the way, I’ll share a smarter, holistic view to help you judge what this stock is really worth.

New Gold delivered 145.0% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: New Gold Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future free cash flows and discounting them back to today’s dollars. This gives investors a sense of the company’s intrinsic worth, independent of market hype and day-to-day price swings.

For New Gold, the most recent annual Free Cash Flow stands at $52.45 million. Analysts have forecast rising cash flows, projecting a steady climb over the years. By 2028, free cash flow is expected to reach $1.18 billion, with further increases extrapolated into the next decade according to Simply Wall St's methodology. These growing cash flows suggest robust operational expansion ahead.

Based on these cash flow estimates, the DCF analysis calculates a fair value of $39.73 per share for New Gold. When compared to the current market price, this implies the stock is trading at a sizeable intrinsic discount of 75.9%. The stock appears significantly undervalued according to this long-term cash flow outlook.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for New Gold.

Our Discounted Cash Flow (DCF) analysis suggests New Gold is undervalued by 75.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: New Gold Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to valuation measure for profitable companies like New Gold, because it connects the company’s current share price to its actual ability to generate profits. Since earnings are a key indicator of a business’s long-term strength, using the PE ratio helps investors compare profitability across companies in the same industry.

It’s important to remember, though, that what counts as a “fair” PE ratio depends on several moving parts. Companies with stronger growth prospects or lower risk profiles typically justify higher multiples. In contrast, riskier or slower-growing stocks tend to trade at lower PEs. For New Gold, the current PE ratio stands at 37.38x. That is noticeably higher than the industry average of 24.04x and the peer average of 21.17x, signaling that the market expects more from New Gold than many competitors.

To make a smarter comparison, Simply Wall St calculates the “Fair Ratio.” This proprietary metric goes beyond blanket industry or peer comparisons by factoring in New Gold’s unique mix of earnings growth, industry standing, profit margin, scale, and risk elements. For New Gold, the calculated Fair Ratio is 36.31x. This suggests that the company’s current PE is only slightly above what’s justified by its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your New Gold Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives, Simply Wall St’s unique, user-friendly tool that connects a company’s evolving story to the numbers you see on its financials. A Narrative lets you articulate your version of what is likely to happen: you set your expectations for New Gold’s future revenue, profit margins, risks, and the fair value that follows, all anchored in your own view of the company’s direction.

This approach empowers you to go beyond static ratios by linking your thesis directly to a forecast and comparing your calculated fair value to the current share price, guiding decisions about when to buy or sell. Narratives are conveniently available within Simply Wall St’s Community page, and millions of investors are already using them to test different market scenarios, with instant updates whenever new earnings results or news arrives so your view stays current.

For example, some investors see New Gold’s ramp-up of higher-grade ore and copper exposure justifying fair values as high as CA$11.60 per share, driven by optimistic production and earnings forecasts, while others focus on operational and capital risks that suggest more modest upside. Narratives make it easy to see, challenge, and refine these perspectives on one dynamic platform.

Do you think there's more to the story for New Gold? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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