Stock Jockey Likes Assured Guaranty's 52-Week High And Key Metrics

By Marc Courtenay of Check the Markets
Date: Friday, March 14, 2014 12:09 AM EST

No one has the proverbial crystal ball, but after the momentum attributed to Assured Guaranty's (symbol AGO) solid fourth-quarter and full-year 2013 earnings results, the shares of the specialty insurer soared Thursday to a new 52-week high of $26.54 before ending the day at $25.54.

AGO has now recorded a 1-year return of nearly 40%, which solidly beats the S&P 500 return of about 22% after Thursday's correction. According to Zacks Equity Research the fourth-quarter earnings figure at Assured Guaranty attained were a positive surprise beat of 10.6% while the top line exceeded the Zacks Consensus Estimate by 16.3%.

"This takes forward the company’s robust earnings performance wherein it delivered  positive earnings surprises in 3 of the last 4 quarters with an average beat of 22.4%. Year 2013 also marked the fourth consecutive year with an operating income that exceeded $0.5 billion at the company.

"Assured Guaranty’s total expenses fell by nearly 27.9% year over year primarily owing to lower loss expense that plunged 47.2% in the quarter, largely attributable to decline in U.S. residential mortgage-backed securities (RMBS) losses. However, higher U.S. public finance losses were a partial offset", Zacks reported.

To sweeten AGO's investment attraction during 2013 the company spent $264 million to repurchase 12.5 million shares besides having $400 million remaining under its authorization.

Also the board of directors increased its quarterly dividend by 10%, marking three straight years of dividend hikes and bringing the total increase to 144% since its Nov 2011 dividend payment. The dividend yield is close to 1.72% currently.

According to Yahoo! Finance Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It offers insurance that protect holders of debt instruments and other monetary obligations from defaults in scheduled payments, including scheduled interest and principal payments.

The company insures various securities, including bonds issued by the United States state or municipal governmental authorities; notes issued to finance international infrastructure projects; and asset-backed securities issued by special purpose entities.

It also insures and reinsures various types of the United States public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, housing revenue, infrastructure, investor-owned utility, and other public finance bonds; and various types of non-United States public finance obligations comprising infrastructure finance, regulated utilities, pooled infrastructure, and other public finance obligations.

In addition, the company insures and reinsures various types of the United States and non-United States structured finance obligations, including pooled corporate obligations, residential mortgage-backed securities, financial products, consumer receivables securities, commercial mortgage-backed securities, commercial receivables securities, insurance securitization securities, and other structured finance securities.

Assured Guaranty Ltd. markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in debt obligations. The company was founded in 2003 and is based in Hamilton, Bermuda.

The key financial metrics on AGO are eye-popping. It has a trailing twelve month (TTM) operating margin of 76%, It's year-over-year quarterly revenue growth soared by over 133% in the last quarter of 2013 and the quarterly EPS growth increased by ...are you sitting down...over 370%!

The stock is currently selling for less than its $28.08 book value and has a 1-year price target of  nearly $32-per-share. As incredible is its very low current PE ratio of 5.94 and its forward (1-year) PE ratio of 9.25. Assured Guaranty is one to watch and may rival the performance of another poster stock for the post-crisis financial recovery in the U.S. Genworth Financial (GNW).

Disclaimer: Nothing in this commentary should be construed as investment advice or guidance or any recommendation to buy or sell any financial instrument. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All content of this commentary is solely an expression of his personal interests and is posted as free-of-charge commentary and is subject to error and change without notice. Please do your own due diligence before investing in ANYTHING. The presence of a link to a website does not indicate approval or endorsement of that website or any services, products or opinions that may be offered by them.

Nothing in this commentary should be construed as investment advice or guidance or any recommendation to buy or sell any financial instrument. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All content of this commentary is solely an expression of his personal interests and is posted as free-of-charge commentary and is subject to error and change without notice. Please do your own due diligence before investing in ANYTHING. The presence of a link to a website does not indicate approval or endorsement of that website or any services, products or opinions that may be offered by them.