Analyzing National Steel (NYSE:SID) and AngloGold Ashanti (NYSE:AU)

National Steel (NYSE:SID) and AngloGold Ashanti (NYSE:AU) are both materials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for National Steel and AngloGold Ashanti, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Steel	3	0	0	0	1.00
AngloGold Ashanti	0	2	7	1	2.90

National Steel currently has a consensus price target of $1.40, suggesting a potential upside of 17.15%. AngloGold Ashanti has a consensus price target of $120.14, suggesting a potential upside of 35.69%. Given AngloGold Ashanti’s stronger consensus rating and higher possible upside, analysts plainly believe AngloGold Ashanti is more favorable than National Steel.

Profitability

This table compares National Steel and AngloGold Ashanti’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Steel	-5.26%	-14.90%	-2.38%
AngloGold Ashanti	32.19%	38.77%	25.72%

Insider and Institutional Ownership

36.1% of AngloGold Ashanti shares are owned by institutional investors. 0.0% of National Steel shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

National Steel pays an annual dividend of $0.09 per share and has a dividend yield of 7.5%. AngloGold Ashanti pays an annual dividend of $0.50 per share and has a dividend yield of 0.6%. National Steel pays out -26.5% of its earnings in the form of a dividend. AngloGold Ashanti pays out 6.7% 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. National Steel is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares National Steel and AngloGold Ashanti”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Steel	$45.11 billion	0.04	-$358.62 million	($0.34)	-3.51
AngloGold Ashanti	$9.89 billion	4.52	$2.64 billion	$7.46	11.87

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

Risk and Volatility

National Steel has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500. Comparatively, AngloGold Ashanti has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Summary

AngloGold Ashanti beats National Steel on 12 of the 17 factors compared between the two stocks.

About National Steel

Companhia Siderúrgica Nacional operates as an integrated steel producer in Brazil and Latin America. It operates through five segments: Steel Industry, Mining, Logistics, Energy, and Cement. The company offers flat steel products, such as hot and cold rolled, galvanized, galvalume, pre-painted, and metal sheets products; coil, sheets, and derivatives; tiles and derivatives, pipes, and profiles; long steel products; steel packaging solutions for the food industry; chemical packaging solution; and carbochemical products. It also provides steel cutting services; produces and sells cement; operates railway and port facilities; and generates electric power from its thermoelectric co-generation and hydroelectric power plants. In addition, the company explores for iron ore reserves at Casa de Pedra and Engenho mines located in the city of Congonhas; and limestone and dolomite at the Bocaina mine located in the city of Arcos in the state of Minas Gerais, Brazil, as well as produces tin. Companhia Siderúrgica Nacional was founded in 1941 and is headquartered in São Paulo, Brazil.

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.