On Jul 3, 2013, Zacks Investment Research upgraded Assured Guaranty Ltd. (AGO) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Assured Guaranty witnessed positive earnings surprise in the last 4 quarters, with an average beat of 38.51%. In fact, the company generated an astounding 86.11% surprise in the first quarter of 2013.
Even in the second quarter of 2013, Assured Guaranty is expected to grow 15.34% year over year, with the Zacks Consensus Estimate of 73 cents. Moreover, all three analysts covering the stock raised their estimates for the company’s 2013 earnings in the last 60 days. As a result, Zacks Consensus Estimate for 2013 earnings per share stands at $3.44, up 22.42% over 2012.
Moreover, the cash balance of Assured Guaranty will get a significant boost from the receipt of a $105 million cash settlement from Flagstar Bank for breach of representations and warranties (R&W) in insured residential mortgage-backed securities (RMBS). Assured Guaranty’s cash balance was $125 million as of Mar 31, 2013.
Further, the strong financial position of Assurance Guaranty prompted the board to increase its share buyback program by $115 million in May 2013. This took the total authorization under the buyback program to almost $200 million.
Besides share repurchases, Assured Guaranty also hikes its dividend to share more profit with shareholders. On Feb 7, 2013, the board of directors approved an 11% hike in its quarterly dividend taking the amount to 10 cents per share from 9 cents paid earlier.
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