Stock Analysis

We Think You Can Look Beyond AngloGold Ashanti's (JSE:ANG) Lackluster Earnings

Published
JSE:ANG
Source: Shutterstock

AngloGold Ashanti Limited's (JSE:ANG) stock was strong despite it releasing a soft earnings report last week. Our analysis suggests that investors may have noticed some promising signs beyond the statutory profit figures.

Check out our latest analysis for AngloGold Ashanti

earnings-and-revenue-history
JSE:ANG Earnings and Revenue History March 1st 2022

How Do Unusual Items Influence Profit?

Importantly, our data indicates that AngloGold Ashanti's profit was reduced by US$94m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. If AngloGold Ashanti doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On AngloGold Ashanti's Profit Performance

Because unusual items detracted from AngloGold Ashanti's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that AngloGold Ashanti's statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Ultimately, this article has formed an opinion based on historical data. However, it can also be great to think about what analysts are forecasting for the future. So feel free to check out our free graph representing analyst forecasts.

This note has only looked at a single factor that sheds light on the nature of AngloGold Ashanti's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether AngloGold Ashanti is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis