Anglogold Ashanti (AU) In A Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Anglogold Ashanti ( AU) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Anglogold Ashanti as such a stock due to the following factors:

  • AU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.9 million.
  • AU has traded 185,421 shares today.
  • AU is down 4.3% today.
  • AU was up 22.4% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in AU with the Ticky from Trade-Ideas. See the FREE profile for AU NOW at Trade-Ideas

More details on AU:

AngloGold Ashanti Limited operates as a gold mining and exploration company. It also produces silver, uranium oxide, and sulphuric acid as by-products. The stock currently has a dividend yield of 0.6%. Currently there is 1 analyst that rates Anglogold Ashanti a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Anglogold Ashanti has been 2.6 million shares per day over the past 30 days. Anglogold Ashanti has a market cap of $3.4 billion and is part of the basic materials sector and metals & mining industry. Shares are down 29.4% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. Analysis:

TheStreet Quant Ratings rates Anglogold Ashanti as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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.
  • 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 47.69%, 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.
  • 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 ($0.51 versus -$6.07).
  • 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 has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.


If you liked this article you might like

President Trump Has Become 'Something of an Albatross' to the Stock Market, Jim Cramer Says

President Trump Has Become 'Something of an Albatross' to the Stock Market, Jim Cramer Says

Apple Should Buy This Healthcare Disruptor, Citi Analyst Says