Assured Guaranty Ltd Stock Downgraded (AGO)

NEW YORK ( TheStreet) -- Assured Guaranty (NYSE: AGO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • AGO's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • AGO, with its very weak revenue results, has greatly underperformed against the industry average of 13.1%. Since the same quarter one year prior, revenues plummeted by 238.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 446.9% when compared to the same quarter one year ago, falling from $139.26 million to -$483.02 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, ASSURED GUARANTY LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
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Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets primarily in the United States, Europe, and Australia. The company has a P/E ratio of 16.6, above the average insurance industry P/E ratio of 3.1 and below the S&P 500 P/E ratio of 17.7. Assured Guaranty has a market cap of $2.39 billion and is part of the financial sector and insurance industry. Shares are down 0.3% year to date as of the close of trading on Tuesday.

You can view the full Assured Guaranty Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
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