Assured Guaranty (AGO) just wrapped up FY 2025 with fourth quarter revenue of US$132 million and basic EPS of US$2.51, alongside net income excluding extra items of US$117 million. Trailing 12 month revenue stood at US$832 million with basic EPS of US$10.37 and net income of US$499 million. Over recent quarters the company has seen revenue move from US$289 million and EPS of US$3.50 in Q1 2025 to US$198 million with EPS of US$2.11 in Q2 and US$213 million with EPS of US$2.19 in Q3. This sets up a results picture where high headline profitability sits alongside shifting quarterly revenue levels, leaving investors focused on how durable current margins really are.

See our full analysis for Assured Guaranty.

With the latest earnings numbers on the table, the next step is to see how these margins and profit trends line up with the widely held market narratives around Assured Guaranty, and where those stories might need updating.

60% net margin flattered by US$182 million one off

• Trailing 12 month net income excluding extra items is US$499 million on US$832 million of revenue, which works out to a 60% net margin compared with 44.9% a year earlier, and the trailing period includes a US$182 million one off gain.
• What stands out for the bullish narrative is that this high margin sits alongside geographic expansion and consolidation moves, while at the same time:
  • Consensus narrative points to new offices across regions such as Australia and Singapore and record 2024 production, yet the 60% margin is partly boosted by the US$182 million gain rather than only by ongoing business.
  • The same narrative expects profit margins to move to 21.6% in three years, so today’s 60% starting point leaves a wide gap between recent profitability and those expectations.

Fast margin expansion paired with a large one off gain is exactly the kind of setup bulls and skeptics interpret very differently, so it is worth seeing how bullish analysts frame the story around AGO's recent 60% margin and US$182 million gain before deciding how durable you think this profitability is. 🐂 Assured Guaranty Bull Case

EPS near US$10.37 while forecasts point to decline

• On a trailing basis, basic EPS is US$10.37, compared with five year earnings growth of 11.2% a year and analyst forecasts for about a 30.5% per year decline in earnings over the next three years.
• Bears focus on those forecast declines and the consensus view raises a few pressure points:
  • Analysts expect earnings to move from US$499 million today to US$195 million by around May 2029, so current EPS of US$10.37 is being set against projections that imply much lower profit ahead.
  • To reach the analyst price target of US$102.33 on those future earnings, the stock would need to trade on a 23.2x P/E compared with today’s trailing P/E of 7.4x, which is a very different valuation backdrop to what the bears are highlighting in the near term.

For anyone weighing AGO's US$10.37 in trailing EPS against forecasts for a sizeable earnings step down, it helps to see how the cautious side of the market connects those numbers to its thesis before leaning too hard on either story. 🐻 Assured Guaranty Bear Case

P/E of 7.4x versus DCF fair value of US$187.57

• The stock trades on a trailing P/E of 7.4x at a share price of US$82.43, compared with a peer average of 10.9x, a US Insurance industry average of 11.4x, an analyst price target of US$102.33 and a DCF fair value figure of US$187.57, while the dividend yield sits at 1.65%.
• Consensus narrative flags both potential upside and clear risks around these valuation gaps:
  • Rewards include the view that AGO is trading about 56.1% below the DCF fair value of US$187.57 and below both peer and industry P/E levels, even after factoring in only modest projected revenue growth of 2.7% a year.
  • On the risk side, the same forecasts call for earnings to decline by about 30.5% a year over the next three years, so the low P/E and discount to DCF fair value sit beside expectations for shrinking profits rather than steady growth.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Assured Guaranty on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With so many moving parts in the story, are you seeing more risk or more reward right now, and how quickly do you want to firm up your own view? Take a closer look at the balance of 4 key rewards and 3 important warning signs

See What Else Is Out There

AGO's story combines a one off gain, forecasts for earnings to move from US$499 million to US$195 million, and a 30.5% annual earnings decline.

If those profit headwinds make you want sturdier earnings stories, check out screener containing 23 high quality undiscovered gems to find companies with strong fundamentals that the market may be overlooking.

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.