Is There Still Opportunity in AngloGold Ashanti After a 441.7% Three-Year Surge?

If you have been watching AngloGold Ashanti’s recent run, you might be wondering whether now is the moment to make your move or if you have already missed the golden window. The stock’s climb this year has turned heads, with a year-to-date increase of 181.7%, and a stunning 441.7% return over the past three years. That kind of performance is hard to ignore. But if the last week’s 7.2% slide set off any alarm bells, you are not alone. Such short-term volatility is enough to spark questions about risk, opportunity, and what is actually driving these swings.

There has been a buzz of activity around AngloGold Ashanti lately, including strategic moves in emerging markets and increasing global interest in gold as a hedge against uncertainty. These factors have played into the stock’s recent momentum, nudging investors to assess the long-term prospects versus immediate market jitters. With a return of 0.4% over the past month and a one-year gain of 141.7%, the story is hardly one of straightforward growth. The stock has ebbed and flowed as investors react to shifting risks and the promise of continued expansion.

Of course, none of this means much unless the fundamentals stack up. That is where valuation comes in. Using six commonly watched checks for whether a stock is undervalued or not, AngloGold Ashanti earns a value score of 3, which means it is undervalued in half the measures, but not exactly a slam dunk. Next, we will walk through these different valuation lenses to see where the company shines, and where the numbers could be flashing caution. And if you are looking for something even more insightful, stay tuned for the end, where I will share a perspective that goes beyond the usual math.

AngloGold Ashanti delivered 141.7% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: AngloGold Ashanti Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's dollars. It is widely used because it aims to capture the true, long-term earning potential of a business by drawing on both analyst estimates and reasonable projections for the future.

For AngloGold Ashanti, the latest reported Free Cash Flow (FCF) stands at $1.46 billion. Analysts provide FCF forecasts up to 2028, and further out, estimates are extrapolated based on trends by Simply Wall St. Projections suggest that by 2028, annual FCF could reach $2.46 billion before tapering down to around $864.98 million by 2030. Over the next ten years, FCF expectations fluctuate due to anticipated shifts in production, gold prices, and investment cycles.

Using these figures, the DCF model arrives at an intrinsic fair value of $46.15 per share. However, compared to the latest market price, this implies that AngloGold Ashanti is currently trading about 48.6% above its fair value according to this cash flow-based analysis, indicating that the stock may be overvalued in today's market.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AngloGold Ashanti.

Our Discounted Cash Flow (DCF) analysis suggests AngloGold Ashanti may be overvalued by 48.6%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: AngloGold Ashanti Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to metric when evaluating profitable companies like AngloGold Ashanti. It gives a quick sense of what investors are willing to pay for each dollar of current earnings. This matters because growing companies or those with stable earnings often trade at higher PE ratios, while riskier firms or those with uncertain future profits tend to attract lower ones.

Right now, AngloGold Ashanti trades at a PE ratio of 19.2x. For context, the average PE for the broader Metals and Mining industry is 25.2x, and the peer group comes in even higher at 34.4x. By those yardsticks, AngloGold Ashanti appears to be trading at a relative discount. However, raw comparisons can be misleading without considering specifics like growth potential, risk profile, and profitability levels.

That is where Simply Wall St’s "Fair Ratio" comes in. This proprietary benchmark for AngloGold Ashanti, calculated at 34.2x, blends together growth trends, profit margins, market cap, and company-specific risks to provide a more nuanced reference point than industry or peer averages. By aligning expectations more closely to the company’s own outlook and characteristics, the Fair Ratio indicates what investors should reasonably pay based on all known factors.

Stacking the numbers up, AngloGold Ashanti’s current PE of 19.2x is well below its Fair Ratio of 34.2x. This suggests the stock is currently undervalued when looking at realistic business fundamentals and not just external benchmarks.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AngloGold Ashanti Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let's introduce you to Narratives. Simply put, a Narrative is the story, context, and personal outlook you attach to a company's future, connecting what you believe about AngloGold Ashanti's growth, margins, and risks directly to the numbers that shape its forecasted earnings and fair value.

Instead of relying solely on fixed multiples or models, Narratives allow you to build a view that combines both facts and your own perspective. For example, you can declare what you think will happen with gold demand, cost control, or production growth, and see immediately how this shapes the fair value of AngloGold Ashanti. Narratives are available right on Simply Wall St’s Community page, giving millions of investors an easy way to compare their fair value with the current share price and make confident buy or sell decisions at a glance.

Even better, Narratives update automatically when new earnings or news arrives, so your thesis evolves as the facts do. With AngloGold Ashanti, some investors are currently projecting a bright future with a fair value as high as $70.50 (factoring in strong growth and expanding margins), while the most cautious see it as low as $38.00. This shows just how much your own expectations and story really matter here.

Do you think there's more to the story for AngloGold Ashanti? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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