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Are These Stocks Nearing A Big Breakout? – New Gold Inc. (NGD), Azul S.A. (AZUL)

New Gold Inc. (AMEX: NGD) shares are 79.55% up in the year-to-date (YTD) period and have moved 7.48% or $0.11 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +305.02% lower. Comparatively, the stock is -10.23% down YTD and 30.58% over the trailing 3-month period. If we look at the shorter duration, its week performance is 3.27% and -4.82% over the month.

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Analyst Recommendations

On February 14, 2020, CIBC recommended the NGD stock is a Sector Underperform, while earlier, CIBC had Upgrade the stock as a Neutral on March 18, 2020. 14 analysts offering the recommendations for the stock have a consensus rating of 2.70 to suggest that the NGD stock is a “Moderate Buy. 1 of the 14 analysts rate the stock as a “Sell”, while 1 has rated it as “Underweight”. 5 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $1.58. The forecasts give the New Gold Inc. stock a price target range of $2.50 on the higher side while at least one analyst think the stock could plunge to a low of $1.49. The two limits represent an upside potential of 36.8% or -6.04%.

Earnings Forecast

Analysts estimate the earnings to increase 500.00% in the current quarter to $0.01, down from the $0.02 reported in the same quarter a year ago. For the current year, earnings should grow to an average of $0.1, up 55.40% from $0.09 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between $0 and $0.08. Wall Street estimates earnings per share to be at an average of $0.16 for the next year.

Azul S.A. (NYSE:AZUL), on the other hand, is trading around $11.55 with a market cap of $1.28B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $12.31 and spell out a more modest performance – a 6.17% return. Some analysts are even forecasting -$1.96 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Azul S.A. (AZUL) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

AZUL’s operating margin was negative on the trailing 12 months basis, remaining steady at -11.60%, while the operating expenses over the recent quarter were at $284.91 million. This represented a 55.0% of the company’s total revenues which amounted $633.13 million. With this in place, we can see that the company’s diluted EPS declined -$4.02 on the year-over-year period, growing to $0.31 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $4.25 billion from $4.86 billion over the previous quarter. Short term investments amounted to $189.35 million while total current assets were at $807.03 million. The cash flow from operating activities totaled $9.69 million, significantly lower than the $57.3 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$40.59 million.

Major holders

Investors are also buoyed by the number of investors in a company, with Azul S.A. having a total of 140 institutions that hold shares in the company. The top two institutional holders are Capital Research Global Investors with over 4.05 million shares worth more than $45.3 million. As of Jun 29, 2020, Capital Research Global Investors held 3.69% of shares outstanding.

The other major institutional holder is Federated Hermes, Inc., with the investment firm holding over 3.12 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $34.89 million and represent 2.84% of shares outstanding.

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