AngloGold Ashanti (AU) Stock Falls on Lower Gold Prices

AngloGold Ashanti (AU) shares are lower as gold prices decline following a better than expected U.S. jobs report.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of AngloGold Ashanti (AU) - Get Report were falling 5.4% to $7.20 on Friday as gold prices fell following a strong U.S. jobs report.

Gold futures for December delivery were down 1.43% to $1,088.60 an ounce on the Comex Friday afternoon.

Prices of the yellow gold were falling after the Labor Department's report that said the U.S. economy added 271,000 new jobs in October, above economists' estimates of 183,000 new jobs in the month. The unemployment rate fell to 5% from 5.1% in September.

The positive jobs report led many investors to believe the Federal Reserve could raise interest rates soon, according to the Wall Street Journal.

"This looks bearish for gold between now and the next Fed meeting...a quarter-point rate increase looks in the cards for their December meeting," RJO Futures senior commodities broker Bob Haberkorn told the Journal.

AngloGold Ashanti is a gold mining and exploration company based in Johannesburg, South Africa.

TheStreet Ratings team rates ANGLOGOLD ASHANTI LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate ANGLOGOLD ASHANTI LTD (AU) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.42 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Net operating cash flow has declined marginally to $323.00 million or 4.15% when compared to the same quarter last year. Despite a decrease in cash flow ANGLOGOLD ASHANTI LTD is still fairing well by exceeding its industry average cash flow growth rate of -54.04%.
  • AU has underperformed the S&P 500 Index, declining 10.10% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 77.5% when compared to the same quarter one year ago, falling from -$80.00 million to -$142.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ANGLOGOLD ASHANTI LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: AU

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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