AngloGold Ashanti (AU) Stock Fell Today on Declining Gold Prices

By Tony Owusu

| 02/06/15 – 04:15 PM EST

NEW YORK (TheStreet) — AngloGold Ashanti
(AU – Get Report) shares closed trading down 5.62% to $12.26 on Friday as gold prices fell today on positive U.S. job growth numbers that may be a precursor to higher Fed interest rates.

COMEX gold prices for April delivery are down 2.08% to $1,236.40 per ounce while spot gold is down 2.29% to $1,235.91 per ounce in trading today.

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The lower prices may be the result of today’s strong jobs numbers as analysts suspect that an improving U.S. economy will spur the Federal Reserve to raise interest rates as early as June, according to the Wall Street Journal.

The U.S. economy added 257,000 jobs in January the Labor Department said today, beating analysts’ 237,000 job forecast.

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 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 22.23% over the past year. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
• AU, with its decline in revenue, underperformed when compared the industry average of 6.5%. 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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