Assured Guaranty (AGO) has drawn fresh attention after recent share price moves, with the stock closing at US$74.19. Investors are weighing this level against the company’s financial profile and recent return history.

Recent trading has been weak for Assured Guaranty, with the 1-month share price return down 13.09% and the year to date share price return down 16.40%, even though the 5-year total shareholder return is 62.63%.

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Given that recent returns for Assured Guaranty have pulled back while longer term performance remains positive, the key issue now is whether today’s price fairly reflects that mix of risk and potential reward.

Most Popular Narrative: 19.6% Undervalued

On the most followed narrative, Assured Guaranty’s last close of $74.19 sits well below an implied fair value of $92.33, which anchors a detailed earnings and cash flow story.

The analysts have a consensus price target of $92.33 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 $103.0, and the most bearish reporting a price target of just $80.0.

Curious what has to happen inside Assured Guaranty’s income statement for that valuation to hold? The narrative focuses on shifting margins, moderated growth, and a specific future earnings multiple. The full story connects those ingredients into a single cash flow path that underpins the fair value.

Result: Fair Value of $92.33 (UNDERVALUED)

However, Assured Guaranty’s story also carries real risk, including exposure to troubled credits like PREPA and sensitivity to interest rate swings across its investment portfolio.

Next Steps

Given the mix of optimism and concern around Assured Guaranty, this is a good time to review the full picture yourself and move quickly to shape your own view with the 5 key rewards and 1 important warning sign

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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.