AngloGold Ashanti (AU) Stock Drops on Lower Gold Prices - TheStreet

NEW YORK (TheStreet) -- Anglogold Ashanti (AU) - Get Report stock is down 3.80% to $6.33 in late-morning trading Friday as gold prices retreat.

Gold prices are sinking due to a likely raise in interest rates by the Federal Reserve, Marketwatch reports.

The precious metal struggles to compete with interest-bearing assets when interest rates rise.

"I think [prices] are going to remain fairly thin, fairly volatile until we get the Fed meeting out of the way," David Govett, head of precious metals at MarexSpectron, told Marketwatch.

Gold for December delivery is declining 1.29% to $1,056.20 per ounce on the COMEX this afternoon.

Based in Johannesburg, South Africa, AngloGold is a gold mining company that operates globally, including in the U.S., Brazil and Argentina.

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 a few notable 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 of 4.15%, ANGLOGOLD ASHANTI LTD is still significantly exceeding the industry average of -54.42%.
  • AU's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.27%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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.