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At US$49.83, Is It Time To Put Assured Guaranty Ltd. (NYSE:AGO) On Your Watch List?

Simply Wall St

Assured Guaranty Ltd. (NYSE:AGO), which is in the insurance business, and is based in Bermuda, saw a decent share price growth in the teens level on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Assured Guaranty’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Assured Guaranty

What is Assured Guaranty worth?

Good news, investors! Assured Guaranty is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $93.55, but it is currently trading at US$49.83 on the share market, meaning that there is still an opportunity to buy now. However, given that Assured Guaranty’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Assured Guaranty?

NYSE:AGO Past and Future Earnings, December 2nd 2019
NYSE:AGO Past and Future Earnings, December 2nd 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Assured Guaranty, it is expected to deliver a negative earnings growth of -16%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although AGO is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to AGO, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on AGO for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Assured Guaranty. You can find everything you need to know about Assured Guaranty in the latest infographic research report. If you are no longer interested in Assured Guaranty, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.