Assessing Assured Guaranty’s Valuation as Short Interest Rises and Buybacks Signal Management Confidence

Recent data on Assured Guaranty (AGO) is sending mixed messages, with short interest rising even as management keeps buying back shares and steadily growing book value, which may hint that the market is misreading the story.

See our latest analysis for Assured Guaranty.

Despite the tug of war between rising short interest and steady buybacks, Assured Guaranty’s 90 day share price return of 10.22 percent and five year total shareholder return of 216.44 percent suggest momentum is quietly building on a solid long term foundation.

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With shares still trading at a hefty discount to both adjusted book value and analyst targets, yet already boasting strong multi year returns, the key question is whether Assured Guaranty remains attractive at current levels or if markets are already pricing in future growth.

Most Popular Narrative Narrative: 13.4% Undervalued

Compared to the last close of $92.18, the most widely followed narrative points to a higher fair value, framing today's price as a potential gap.

The analysts have a consensus price target of $106.5 for Assured Guaranty based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $116.0, and the most bearish reporting a price target of just $95.0.

Read the complete narrative.

Want to see how shrinking revenues, changing margins and a richer future earnings multiple can still justify a higher valuation? Unpack the full narrative to see which projections, and which assumptions about profitability and share count, do the heavy lifting in this fair value call.

Result: Fair Value of $106.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering exposure to troubled credits and sensitivity to interest rate swings could quickly pressure margins and undermine today’s seemingly comfortable valuation gap.

Find out about the key risks to this Assured Guaranty narrative.

Another Lens on Valuation

On earnings, the picture tilts the other way. AGO trades around 10.6 times earnings versus a fair ratio of 8.9 times and roughly 13.5 times for the wider US insurance group, hinting at decent relative value but also some downside risk if sentiment cools.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Assured Guaranty Narrative

If you see things differently or would rather dig into the numbers yourself, you can build a personalized view in under three minutes: Do it your way.

A great starting point for your Assured Guaranty research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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