Reviewing AngloGold Ashanti (NYSE:AU) & Cleveland-Cliffs (NYSE:CLF)

AngloGold Ashanti (NYSE:AU) and Cleveland-Cliffs (NYSE:CLF) are both materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for AngloGold Ashanti and Cleveland-Cliffs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AngloGold Ashanti	0	2	6	2	3.00
Cleveland-Cliffs	2	6	3	0	2.09

AngloGold Ashanti currently has a consensus price target of $120.14, suggesting a potential upside of 32.45%. Cleveland-Cliffs has a consensus price target of $13.20, suggesting a potential downside of 3.78%. Given AngloGold Ashanti’s stronger consensus rating and higher possible upside, equities research analysts clearly believe AngloGold Ashanti is more favorable than Cleveland-Cliffs.

Earnings and Valuation

This table compares AngloGold Ashanti and Cleveland-Cliffs”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AngloGold Ashanti	$9.89 billion	4.63	$2.64 billion	$7.46	12.16
Cleveland-Cliffs	$19.20 billion	0.41	-$1.48 billion	($0.85)	-16.14

AngloGold Ashanti has higher earnings, but lower revenue than Cleveland-Cliffs. Cleveland-Cliffs is trading at a lower price-to-earnings ratio than AngloGold Ashanti, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

AngloGold Ashanti has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 2.09, meaning that its stock price is 109% more volatile than the S&P 500.

Institutional & Insider Ownership

36.1% of AngloGold Ashanti shares are owned by institutional investors. Comparatively, 67.7% of Cleveland-Cliffs shares are owned by institutional investors. 0.9% of Cleveland-Cliffs shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares AngloGold Ashanti and Cleveland-Cliffs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AngloGold Ashanti	32.19%	38.77%	25.72%
Cleveland-Cliffs	-2.36%	-6.83%	-2.05%

Dividends

AngloGold Ashanti pays an annual dividend of $0.50 per share and has a dividend yield of 0.6%. Cleveland-Cliffs pays an annual dividend of $0.24 per share and has a dividend yield of 1.7%. AngloGold Ashanti pays out 6.7% of its earnings in the form of a dividend. Cleveland-Cliffs pays out -28.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cleveland-Cliffs is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

AngloGold Ashanti beats Cleveland-Cliffs on 11 of the 17 factors compared between the two stocks.

About AngloGold Ashanti

AngloGold Ashanti plc operates as a gold mining company in Africa, Australia, and the Americas. The company primarily explores for gold, as well as produces silver and sulphuric acid as by-products. Its flagship property is a 100% owned Geita mine located in the Lake Victoria goldfields of the Mwanza region in north-western Tanzania. AngloGold Ashanti plc was incorporated in 1944 and is headquartered in Greenwood Village, Colorado.

About Cleveland-Cliffs

Cleveland-Cliffs is the largest flat-rolled steel company and the largest iron ore pellet producer in North America. The company is vertically integrated from mining through iron making, steelmaking, rolling, finishing and downstream with hot and cold stamping of steel parts and components. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.