ANGLOGOLD ASHANTI PLC (NYSE:AU) Screens as a Top Decent Value Stock

In value investing, the search for undervalued securities often involves identifying companies whose market price does not reflect their intrinsic worth, based on fundamental metrics. This approach, pioneered by Benjamin Graham and later refined by investors like Warren Buffett, emphasizes financial health, profitability, reasonable growth, and attractive valuation as key pillars. A "decent value" screen, such as the one used here, filters for stocks with strong valuation ratings, indicating they may be priced below their intrinsic value, while also maintaining good scores in profitability, financial health, and growth, reducing the risk of value traps and aligning with the margin of safety principle.

Valuation Metrics
ANGLOGOLD ASHANTI PLC (NYSE:AU) presents a notable valuation profile, scoring 7 out of 10 in this category. Key points include:

• A price-to-earnings (P/E) ratio of 18.95, which is cheaper than 83.23% of its industry peers in metals and mining, suggesting relative undervaluation.
• A forward P/E ratio of 12.66, below the S&P 500 average of 22.73, indicating expectations of sustained earnings.
• A low PEG ratio, which accounts for growth, reinforcing the stock's appeal as potentially undervalued.

These metrics are critical for value investors, as they help identify discrepancies between market price and intrinsic value, providing a buffer, or margin of safety, against estimation errors or market volatility.

Financial Health
The company demonstrates solid financial health with a rating of 8 out of 10, supported by:

• A strong Altman-Z score of 5.26, signaling low bankruptcy risk and outperforming 71.61% of industry competitors.
• A debt-to-free-cash-flow ratio of 1.31, indicating efficient debt management and the ability to cover obligations quickly.
• Healthy liquidity ratios, including a current ratio of 2.99 and a quick ratio of 2.22, ensuring short-term financial stability.

For value strategies, sound financial health reduces the risk of insolvency and supports the company's ability to weather economic downturns, aligning with the principle of preserving capital while seeking undervalued opportunities.

Profitability Strength
ANGLOGOLD ASHANTI performs well in profitability, earning a top rating of 9 out of 10. Highlights include:

• A return on equity (ROE) of 27.35%, outperforming 96.77% of the industry, reflecting efficient use of shareholder capital.
• A profit margin of 22.19% and an operating margin of 35.00%, both ranking in the top tier of peers.
• Consistent cash flow from operations over the past five years, highlighting operational reliability.

High profitability is a cornerstone of value investing, as it suggests a company has a durable competitive advantage and the potential to generate sustainable returns, which can lead to price appreciation as the market recognizes this strength.

Growth Considerations
With a growth rating of 6 out of 10, the company shows a mixed but generally positive trajectory:

• Past performance includes impressive growth, with revenue up 26.43% year-over-year and earnings per share (EPS) surging 517.47%.
• Future revenue is expected to grow at 8.28% annually, though EPS growth may face near-term headwinds.

While growth is secondary to valuation and health in value investing, decent growth metrics help ensure that the company is not stagnant, reducing the risk of a value trap and supporting the thesis that intrinsic value may increase over time.

Conclusion
ANGLOGOLD ASHANTI PLC appears to align well with value investing criteria, offering an attractive valuation, strong financial health, high profitability, and reasonable growth. These factors suggest it may be undervalued relative to its intrinsic worth and industry peers. For investors seeking similar opportunities, further research and screening can be conducted using tools like the Decent Value Stocks Screen, which identifies stocks with balanced fundamental strengths.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with a financial professional before making investment decisions.