Why AngloGold Ashanti (AU) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of AngloGold Ashanti (AU) are down 16.79% to $12.89 after the gold miner said it plans to spin-off its international assets into a new London-listed company by the middle of next year and announced a $2.1 billion share sale to pay off debt, Bloomberg reports.

The spin-off of its operations outside of South Africa was sparked by pressure from its investors, including Paulson & Co. head John Paulson, whose hedge fund owns 6.6% of AngloGold shares. 

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The company said it plans to distribute 35% of the shares in the new company, and initially retain the remaining 65% stake.

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 several 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 and poor profit margins."

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

  • The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The gross profit margin for ANGLOGOLD ASHANTI LTD is currently lower than what is desirable, coming in at 33.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.91% is significantly below that of the industry average.
  • 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 trails that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 96.3% when compared to the same quarter one year prior, rising from -$2,165.00 million to -$80.00 million.
  • ANGLOGOLD ASHANTI LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ANGLOGOLD ASHANTI LTD swung to a loss, reporting -$6.07 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus -$6.07).
  • You can view the full analysis from the report here: AU Ratings Report

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