As you might know, Assured Guaranty Ltd. (NYSE:AGO) recently reported its quarterly numbers. It looks like a pretty bad result, given that revenues fell 18% short of analyst estimates at US$190m, and the company reported a statutory loss of US$0.59 per share instead of the profit that the analysts had been forecasting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the consensus from Assured Guaranty's four analysts is for revenues of US$861.7m in 2020, which would reflect a measurable 5.7% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to nosedive 42% to US$1.76 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$926.5m and earnings per share (EPS) of US$3.01 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$60.75 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Assured Guaranty at US$66.00 per share, while the most bearish prices it at US$55.00. This is a very narrow spread of estimates, implying either that Assured Guaranty is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 5.7% revenue decline is better than the historical trend, which saw revenues shrink -18% annually over the past five years
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Assured Guaranty. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Assured Guaranty going out to 2022, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 1 warning sign for Assured Guaranty that you should be aware of.
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