Nyse Order Imbalance 61631.0 Shares On Sell Side

Assured Guaranty currently trades at $89.47 per share and has shown little upside over the past six months, posting a middling return of 4.8%. The stock also fell short of the S&P 500’s 10.4% gain during that period.

Is now the time to buy Assured Guaranty, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.

Why Do We Think Assured Guaranty Will Underperform?

We don't have much confidence in Assured Guaranty. Here are three reasons there are better opportunities than AGO and a stock we'd rather own.

1. Declining Net Premiums Earned Reflect Weakness

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore gross premiums less what’s ceded to reinsurers as a risk mitigation and transfer strategy.

Assured Guaranty’s net premiums earned has declined by 3.6% annually over the last five years, much worse than the broader insurance industry. This shows that policy underwriting underperformed its other business lines.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Assured Guaranty’s revenue to drop by 20.2%, a decrease from its 14% annualized declines for the past two years. This projection is underwhelming and suggests its products and services will face some demand challenges.

3. Previous Growth Initiatives Haven’t Impressed

Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, Assured Guaranty has averaged an ROE of 7.8%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

Final Judgment

We see the value of companies helping consumers, but in the case of Assured Guaranty, we’re out. With its shares underperforming the market lately, the stock trades at 0.7× forward P/B (or $89.47 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at insurance stocks, starting with Kemper .

The insurance industry absorbs and diversifies risk, providing financial protection against unforeseen life, health, property, and liability events. Profits come from underwriting—collecting more in premiums than paid in claims—and investing the 'float'. This cyclical industry benefits from 'hard markets' with strong pricing power and higher interest rates that enhance investment income. AI adoption is improving underwriting through sophisticated data analysis and reducing costs via automation. However, 'soft markets' and low rates create headwinds, while the industry faces elevated claims costs from climate catastrophes, inflation, and rising litigation expenses.

The 57 insurance stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 3.8%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Kemper

Originally known as Unitrin until rebranding in 2011, Kemper is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.

Kemper reported revenues of $1.24 billion, up 4.8% year on year. This print exceeded analysts’ expectations by 1.5%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts’ EPS and book value per share estimates.

“Our results for the quarter were disappointing and below our expectations,” said C. Thomas Evans, Jr., Interim CEO.

Unsurprisingly, the stock is down 13.9% since reporting and currently trades at $36.70.

Read our full report on Kemper here, it’s free for active Edge members.

Best Q3: Hamilton Insurance Group

Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.

Hamilton Insurance Group reported revenues of $667.7 million, up 30.2% year on year, outperforming analysts’ expectations by 10.3%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.

The market seems happy with the results as the stock is up 10.3% since reporting. It currently trades at $26.01.

Is now the time to buy Hamilton Insurance Group? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Brighthouse Financial

Spun off from MetLife in 2017 to focus specifically on retail financial products, Brighthouse Financial provides annuity contracts and life insurance products designed to help individuals protect wealth, generate income, and transfer assets.

Brighthouse Financial reported revenues of $2.17 billion, flat year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net premiums earned estimates.

The stock is flat since the results and currently trades at $65.54.

Read our full analysis of Brighthouse Financial’s results here.

Stewart Information Services

Founded in 1893 during America's westward expansion when property records were often disputed, Stewart Information Services provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.

Stewart Information Services reported revenues of $796.9 million, up 19.3% year on year. This result beat analysts’ expectations by 31%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is down 5.1% since reporting and currently trades at $71.25.

Read our full, actionable report on Stewart Information Services here, it’s free for active Edge members.

Assured Guaranty

Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.

Assured Guaranty reported revenues of $207 million, down 23% year on year. This print surpassed analysts’ expectations by 12.2%. It was an incredible quarter as it also put up a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

The stock is up 8.1% since reporting and currently trades at $88.09.

Read our full, actionable report on Assured Guaranty here, it’s free for active Edge members.