NEW YORK ( TheStreet) -- Anglogold Ashanti (NYSE: AU) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 15.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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, ANGLOGOLD ASHANTI LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- ANGLOGOLD ASHANTI LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ANGLOGOLD ASHANTI LTD increased its bottom line by earning $3.91 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 7.1% in earnings ($3.63 versus $3.91).
- 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 33.92%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff