Value
7.6/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 9.2 |
| P/S | 7.4 |
| Fwd P/E | 9.2 |
| Analyst target | 5.0 |
- ▸Forward P/E: 10.9x
- ▸Attractively valued
AGO · Why this verdict
Why Assured Guaranty (AGO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
An attractively valued specialty insurer with three consecutive large earnings beats and upward-trending estimates has a compelling catalyst profile, but a death cross, declining revenue, and weak free cash flow conversion materially limit the investability of the setup at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus earnings estimates in each of the three most recent quarters — with average surprises above 50% in those quarters — after a miss of -37% in the oldest of the four reported quarters, and estimates continue to trend upward. Earnings | EPS continues to beat consensus estimates in each of the next 2 quarters, sustaining the recent beat cadence. | →Stable |
| CounterThe prior miss of -37% in the oldest quarter signals that earnings can be highly volatile; the current beat streak may reflect favorable reserve timing or mark-to-market items rather than a durable operating improvement that can persist. | ||
A forward price-to-earnings ratio of 9.9x positions the stock as attractively valued relative to its near-term earnings power, with the valuation dimension scoring among the higher-rated characteristics in the overall assessment. Valuation breakdown | The forward P/E multiple remains below 13x over the next 12 months as earnings estimates hold or rise, preserving the valuation discount. | →Stable |
| CounterA low multiple may persist indefinitely when revenue is declining; cheap multiples in contracting businesses can stay cheap or get cheaper absent a catalyst that reverses the top-line trend. | ||
Free cash flow converts at only 45% of reported net income, flagging a meaningful gap between stated profitability and actual cash generation that undermines the reliability of the earnings-based valuation. Quality breakdown | If cash conversion is improving, free cash flow as a percentage of net income should rise above 70% within the next two fiscal years, closing the gap between reported earnings and cash reality. | →Stable |
| CounterSpecialty insurance businesses can show structural differences between GAAP earnings and cash timing due to investment portfolio mechanics; a 45% conversion ratio may reflect timing rather than a fundamental earnings-quality problem. | ||
A death cross is in effect with declining on-balance volume and the stock trading below its 200-day moving average, indicating sustained distribution and a weak technical backdrop that blocks the buy case. Momentum breakdown | Price crosses back above the 200-day moving average and on-balance volume turns positive within the next 60 days, signaling that selling pressure has exhausted itself. | →Stable |
| CounterThe MACD is improving even within the death cross, which suggests the breakdown may be losing momentum; a quick MACD flip to positive could resolve the technical headwind before price has declined substantially. | ||
Revenue is declining at -6% year-over-year, signaling top-line contraction that undermines confidence in the sustainability of earnings growth driven by cost discipline or favorable claim reserve development. Growth breakdown | Revenue growth turns positive and exceeds 3% year-over-year for at least 2 consecutive quarters over the next 12 months, indicating the top-line contraction has reversed. | →Stable |
| CounterA specialty insurer can generate strong returns during a period of managed book contraction; declining premiums written paired with rising earnings per share may reflect deliberate risk selection rather than secular deterioration. | ||
The company has beaten consensus earnings estimates in each of the three most recent quarters — with average surprises above 50% in those quarters — after a miss of -37% in the oldest of the four reported quarters, and estimates continue to trend upward.
→StableEarnings
- Expectation
- EPS continues to beat consensus estimates in each of the next 2 quarters, sustaining the recent beat cadence.
CounterThe prior miss of -37% in the oldest quarter signals that earnings can be highly volatile; the current beat streak may reflect favorable reserve timing or mark-to-market items rather than a durable operating improvement that can persist.
A forward price-to-earnings ratio of 9.9x positions the stock as attractively valued relative to its near-term earnings power, with the valuation dimension scoring among the higher-rated characteristics in the overall assessment.
→StableValuation breakdown
- Expectation
- The forward P/E multiple remains below 13x over the next 12 months as earnings estimates hold or rise, preserving the valuation discount.
CounterA low multiple may persist indefinitely when revenue is declining; cheap multiples in contracting businesses can stay cheap or get cheaper absent a catalyst that reverses the top-line trend.
Free cash flow converts at only 45% of reported net income, flagging a meaningful gap between stated profitability and actual cash generation that undermines the reliability of the earnings-based valuation.
→StableQuality breakdown
- Expectation
- If cash conversion is improving, free cash flow as a percentage of net income should rise above 70% within the next two fiscal years, closing the gap between reported earnings and cash reality.
CounterSpecialty insurance businesses can show structural differences between GAAP earnings and cash timing due to investment portfolio mechanics; a 45% conversion ratio may reflect timing rather than a fundamental earnings-quality problem.
A death cross is in effect with declining on-balance volume and the stock trading below its 200-day moving average, indicating sustained distribution and a weak technical backdrop that blocks the buy case.
→StableMomentum breakdown
- Expectation
- Price crosses back above the 200-day moving average and on-balance volume turns positive within the next 60 days, signaling that selling pressure has exhausted itself.
CounterThe MACD is improving even within the death cross, which suggests the breakdown may be losing momentum; a quick MACD flip to positive could resolve the technical headwind before price has declined substantially.
Revenue is declining at -6% year-over-year, signaling top-line contraction that undermines confidence in the sustainability of earnings growth driven by cost discipline or favorable claim reserve development.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive and exceeds 3% year-over-year for at least 2 consecutive quarters over the next 12 months, indicating the top-line contraction has reversed.
CounterA specialty insurer can generate strong returns during a period of managed book contraction; declining premiums written paired with rising earnings per share may reflect deliberate risk selection rather than secular deterioration.
Per-dimension breakdown
Quality
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.6 |
| ROA | 1.0 |
| Gross margin | 10.0 |
| Op margin | 9.7 |
| Net margin | 10.0 |
| Current ratio | 3.9 |
| FCF quality | 3.6 |
| Moat | 5.4 |
| Rule of 40 | 3.0 |
| Piotroski F | 4.4 |
- ▸Strong margins: 51%
- ▸Earnings quality RED FLAG: 45% FCF/NI
- ▸No competitive moat
- ▸Rule of 40: 16 (fail)
Growth
0.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.0 |
| EPS growth | 0.0 |
- ▸Declining revenue: -6%
Momentum
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.8 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.5 |
| Volume | 0.0 |
- ▸Overbought bear rally (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.5 |
| erm sentiment | 6.5 |
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $13,935,803 (0.402% of mkt cap)
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.5 |
| quality rank | 2.5 |
| growth rank | 0.0 |
Technical
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.5 |
| 52w position | 7.1 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.9 |
| days to cover | 6.8 |
| volatility | 8.1 |
| put call | 0.0 |
| implied vol | 6.8 |
| max pain risk | 7.0 |
| beta | 8.5 |
| debt equity | 8.8 |
- ▸Elevated put/call: 7.00
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 194.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (7)
- MOMENTUM:5.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.0<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=5.9>=5.0 recovering
Reward-to-Risk
0.04
Upside
+0.3%
Downside
7.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 73
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $3.5B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.0<1.5@spot) reinforce the read. Current asymmetry R:R is 0.04 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.6, Catalyst at 7.0, and Risk (lower is worse) at 6.6; the weakest are Growth at 0.5, Peer rank at 2.8, and Technical at 3.2. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.04 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten consensus earnings estimates in each of the three most recent quarters — with average surprises above 50% in those quarters — after a miss of -37% in the oldest of the four reported quarters, and estimates continue to trend upward.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2A forward price-to-earnings ratio of 9.9x positions the stock as attractively valued relative to its near-term earnings power, with the valuation dimension scoring among the higher-rated characteristics in the overall assessment.
Trip ifForward P/E expands above 14x while revenue growth remains negative.
- P3Free cash flow converts at only 45% of reported net income, flagging a meaningful gap between stated profitability and actual cash generation that undermines the reliability of the earnings-based valuation.
Trip ifFree cash flow as a percentage of net income rises above 70% for 2 consecutive fiscal years.
- P4A death cross is in effect with declining on-balance volume and the stock trading below its 200-day moving average, indicating sustained distribution and a weak technical backdrop that blocks the buy case.
Trip ifPrice crosses back above the 200-day moving average and on-balance volume rises for 4 consecutive weeks.
- P5Revenue is declining at -6% year-over-year, signaling top-line contraction that undermines confidence in the sustainability of earnings growth driven by cost discipline or favorable claim reserve development.
Trip ifRevenue growth turns positive and exceeds 3% year-over-year for 2 consecutive quarters.