One Reason AngloGold Ashanti (AU) Stock is Down Today
NEW YORK (TheStreet) -- Shares of AngloGold Ashanti (AU) - Get Report are falling by 3.12% to $6.82 in midday trading on Thursday, as some mining and metals stocks take a hit from the slump in gold prices.
AngloGold Ashanti is a Johannesburg, South Africa-based gold mining and exploration company.
The price of the precious metal is being pressured by expectations for an interest rate hike out of the U.S. in December.
"We expect prices to fall a little bit further because of the anticipated rate hike by the Fed in December," Capital Economics analyst Simona Gambarini told Reuters. "Prices could fall to $1,050 [per ounce] by the end of the year."
Gold struggles to compete against interest yielding assets when rates go up.
Gold for December delivery is down by 0.39% to $1,080.70 per ounce on the COMEX this afternoon.
Separately, 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 some concerns, 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 of 4.15%, ANGLOGOLD ASHANTI LTD is still significantly exceeding the industry average of -55.73%.
- AU has underperformed the S&P 500 Index, declining 14.08% 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.