Hudbay Minerals (NYSE:HBM) versus New Gold (NYSE:NGD) Critical Review

New Gold (NYSE:NGD) and Hudbay Minerals (NYSE:HBM) are both mid-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

42.8% of New Gold shares are held by institutional investors. Comparatively, 57.8% of Hudbay Minerals shares are held by institutional investors. 0.2% of New Gold shares are held by company insiders. Comparatively, 0.3% of Hudbay Minerals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares New Gold and Hudbay Minerals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
New Gold	2.33%	8.56%	3.59%
Hudbay Minerals	4.03%	6.71%	2.89%

Risk and Volatility

New Gold has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Hudbay Minerals has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for New Gold and Hudbay Minerals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
New Gold	0	2	3	2	3.00
Hudbay Minerals	0	0	4	2	3.33

New Gold currently has a consensus target price of $3.08, indicating a potential upside of 11.80%. Hudbay Minerals has a consensus target price of $11.17, indicating a potential upside of 23.18%. Given Hudbay Minerals’ stronger consensus rating and higher possible upside, analysts clearly believe Hudbay Minerals is more favorable than New Gold.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
New Gold	$786.50 million	2.77	-$64.50 million	$0.02	137.75
Hudbay Minerals	$1.69 billion	2.11	$66.37 million	$0.23	39.41

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

Summary

Hudbay Minerals beats New Gold on 10 of the 14 factors compared between the two stocks.

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.

About Hudbay Minerals

Hudbay Minerals Inc., a diversified mining company, focuses on the exploration, development, operation, and optimization of properties in North and South America. It produces copper concentrates containing gold, silver, and molybdenum; gold concentrates containing zinc; zinc concentrates; molybdenum concentrates; and silver/gold doré. The company's flagship project is the 100% owned Constancia mine located in the Province of Chumbivilcas in southern Peru. Hudbay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.