AngloGold Ashanti (AU) Stock Rising Today on Higher Gold Prices

NEW YORK (TheStreet) -- Shares of AngloGold Ashanti (AU) are rising by 4.27% to $9.03 in midday trading on Tuesday, as gold prices rally following cautious comments from U.S. Federal Reserve policymakers, Reuters reports.

Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday that he's sticking with his view that the U.S. central bank should hold off on raising rates until the middle of next year or later, the Wall Street Journal reports.

Lockhart said there was in no rush to drop the Fed's pledge to keep interest rates near zero for a "considerable time," Reuters added.

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The comments led to a pullback in the dollar. A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies, Reuters noted.

U.S. gold futures are up 2.96% to $1,230.30 an ounce as of 12:24 p.m. today.

South Africa-based AngloGold Ashanti  is a gold mining company with a portfolio of assets in key gold producing regions.

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 some concerns, 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 32.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.08% significantly trails 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 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.
  • This stock's share value has moved by only 30.80% over the past year. 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.
  • AU, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: AU Ratings Report

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