AngloGold Ashanti (AU) Stock Falls Today as Gold Prices Decline

NEW YORK (TheStreet) -- Shares of AngloGold Ashanti  (AU) were down 7.09% to $8.11 in early afternoon trading Monday as gold prices declined.

Gold prices, which hit a four-year low of $1,130.40 in November, stayed below $1,200 an ounce on Monday, as the precious metal price fell 1.28% to $1,180.70 at 12:41 p.m.

A strong dollar has kept gold prices down for the last several weeks. The precious metal was down approximately 15% on Monday from its 2014 high of $1,392.60, which it hit on March 17.

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"The overall environment is very negative for gold," Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago, told Bloomberg. "The market will remain volatile as trading will be very thin for the next two weeks."

More than 2.6 million shares had changed hands as of 12:39 p.m.

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 a few notable 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 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 25.56% 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 3.6%. 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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