The board of directors of AngloGold Ashanti Ltd. (AU, Financial) declared its dividend for 2017 last month after a little over a three-year suspension.
The South African gold producer headquartered in Johannesburg will pay 9.92 cents per ordinary share on April 17 to shareholders of record as of March 24.
The distribution of the dividend is backed by consistent improvements in the South African miner’s economics which are explained in this article.
AngloGold Ashanti is trading at $11.18, down 3 cents or -0.23% from the previous trading day. The stock is trading with a price-earnings (P/E) ratio of 74.37 and a price-sales (P/S) ratio of 1.06. The forward P/E ratio is 13.95.
As of Wednesday, the majority of analysts surveyed recommended holding shares of AngloGold Ashanti with a recommendation rating of 3. The analysts’ average target price per share is $13.23, an 18.3% upside from the current share price.
The stock is up trending and has gained 6.4% year to date. Over the last 12 months, the share price ranged between a low of $9.28 and a high of $22.91. The stock is trading at a share price that is considerably lower than its 52-week highest and represents an interesting entering point since the stock may surge as the gold price trades higher in response to institutional investors’ renewed interest in gold as pressure from a less hasty than expected rise in U.S. interest rates and “the proliferation of negative policy rates across other key reserve currencies” increased, reports silverinstitute.org.
The EV/EBITDA ratio is 4.78 and the price-book (P/B) (mrq) is 1.68.
For 2017, analysts forecast the company will generate EPS of 15 cents on average, a 57% decrease from 2016 EPS, ranging between a low estimate of -1 cent per share and a high estimate of 30 cents per share.
Source: Yahoo Finance
Revenue for 2017 is forecast to come in at $4.1 billion on average, a 3.50% decrease from the same figure in 2016. Average revenue ranges between a low estimate of $3.69 billion and a high estimate of $4.59 billion.
The miner has a total long-term debt of $2.14 billion, which is huge compared to the liquidity of $220 million that the company has in cash on hand, but the company is following a strategy of debt reduction that led to a substantial improvement in its financial situation witnessed by an interest coverage ratio of 10, one of the highest in the gold stock industry. The South African gold producer doesn’t have any problems in paying interest expenses on the outstanding debt.
AngloGold Ashanti can generate enough cash flow from its operations to finance the business and advance its projects, paying down debt and sustaining the distribution of the dividend.
Disclosure: I have no positions in AngloGold Ashanti.
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