AGO
Assured Guaranty Ltd.
$76.89
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 38.3% below fair value
You pay
$76.89
Bear
$69.46
Fair
$124.59
Bull
$157.67
Bear
$69.46
-9.7%
ROTCE 6.9% → 0.61x TBV
Fair
$124.59
+62.0%
ROTCE 9.2% → 1.10x TBV
Bull
$157.67
+105.1%
ROTCE 10.6% → 1.39x TBV
Key Value Driver
ROTCE (9.2%) vs. cost of equity (8.7%)
Implied Market Multiple
0.62x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $80.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $124.59 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $80.00 (from 9 analysts). Our estimate is 70% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly