AngloGold Ashanti (AU) Stock Rising as Gold Reaches Three-Month High

NEW YORK (TheStreet) -- Shares of AngloGold Ashanti  (AU) are rising, up 2.23% to $11.45 in midday trading Thursday, as gold prices climb to reach a three month high after mixed U.S. data pushed back expectations of when interest rates will rise, according to Reuters.

Weekly jobless claims fell last week, but producer price index showed that a strong dollar and lower oil prices suppressed producer inflation in April, Reuters reports.

Spot gold prices rallied to the highest level since Feb. 17 at $1,226.20 an ounce earlier today, and was last trading at $1,223.14 an ounce as of 12:32 p.m. ET today.

U.S. gold futures for June delivery were up 0.4% to $1,223.10 an ounce as of 12:22 p.m. ET.

South Africa-based AngloGold Ashanti is a gold mining and exploration company with a portfolio of mining operations and projects on four continents.

The company works across the spectrum of the mining value chain. 

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 number of negative factors, 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, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • The debt-to-equity ratio of 1.31 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, AU maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for ANGLOGOLD ASHANTI LTD is currently lower than what is desirable, coming in at 34.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.40% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $213.00 million or 50.58% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ANGLOGOLD ASHANTI LTD has marginally lower results.
  • 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 37.56%, 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.
  • 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.
  • You can view the full analysis from the report here: AU Ratings Report

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