Assured Guaranty Upped to Strong Buy - Analyst Blog


On Jan 14, Zacks Investment Research upgraded Assured Guaranty Ltd . ( AGO ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Assured Guaranty has witnessed rising earnings estimates on the back of solid results. This multiline insurer delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 27.9%.

In the last reported quarter Assured Guaranty's operating earnings surpassed the Zacks Consensus Estimate by 4.9%. The outperformance was largely aided by share buybacks and lower loss expenses.

Loss expense plunged 44% year over year to $56 million, largely attributable to decline in U.S. residential mortgage-backed securities (RMBS) losses. This in turn led to total expense declining nearly 22% year over year.

Assured Guaranty's active share repurchase program also complements its bottom line. Till mid¬-Nov 2013, Assured Guaranty has bought back 12.5 million of its shares for $264 million under the $315 million share repurchase authorization. The board concurrently approved another share repurchase program of $400 million.

Long-term borrowings of Assured Guaranty trimmed 2% to $819 million at third quarter-end from 2012-end level. Adjusted book value per share increased 5% from the 2012-end level to $49.55 as on Sep 30, 2013 largely driven by share buybacks.

Since the company went public in 2004, Assured Guaranty has delivered positive earnings in each quarter despite all odds.

The Zacks Consensus Estimate for 2013 and 2014 increased 1% to $3.18 per share and 1.5% to $3.77 per share, respectively, over the last 60 days. These estimates represent a year-over-year increase of 13.1% for 2013 and a decline of 12.8% for 2014.

We wait to see if the company manages to deliver another quarter of positive earnings surprise when it reports its fourth quarter results soon. The Zacks Consensus Estimate for the fourth quarter is currently pegged at 66 cents, translating into a year-over-year decline of 29%.

Other Stocks to Consider

Other multiline stocks worth considering include American International Group, Inc . ( AIG ), Cigna Corp . ( CI ) and CNO Financial Group, Inc. ( CNO ). All these stocks share the same Zacks Rank as Assured Guaranty.

ASSURED GUARNTY (AGO): Free Stock Analysis Report

AMER INTL GRP (AIG): Free Stock Analysis Report

CIGNA CORP (CI): Free Stock Analysis Report

CNO FINL GRP (CNO): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AGO , AIG , CI , CNO , RMBS

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