NEW YORK (TheStreet) -- Shares of AngloGold Ashanti (AU) - Get AngloGold Ashanti Limited Sponsored ADR Report were falling 6.6% to $7.89 with heavy trading volume on Wednesday as gold prices declined due to strength in the dollar.
Gold futures for December delivery were down 0.57% to $1,107.70 an ounce on the Comex Wednesday afternoon.
Prices of the yellow metal fell after comments from Federal Reserve Chairwoman Janet Yellen helped strengthen the dollar, according to Market Watch. During her testimony before the House Financial Services Committee, Yellen said the Fed's December meeting is still a "live meeting" for an interest rate increase.
"With only six weeks to go, the focus will be very much on incoming U.S. data in order to decipher what the FOMC intend to do on Dec. 16," Saxo Bank analyst Ole Hansen told Bloomberg. "I could see the market movements slow down as traders now look for further guidance."
Gold performs better in low interest rate environments as it does not bear a yield.
About 5.6 million shares of AngloGold Ashanti were traded by 3:13 p.m. Wednesday, above the company's average trading volume of about 4.6 million shares a day.
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.