Back to top

Analyst Blog

On Aug 26, we upgraded Genworth Financial Inc. (GNW - Analyst Report) to Neutral from Underperform on the back of its solid second quarter results. This life and mortgage insurer carries a Zacks Rank #3 (Hold).

Why the Upgrade?

On Jul 30, Genworth Financial reported second-quarter 2013 net operating income of 27 cents per share. Though the results fell short of the Zacks Consensus Estimate, it was well above the year-ago level of 14 cents. Genworth Financial delivered earnings surprise in 3 of the last 4 quarters with an average of 16.6%

During the reported quarter, Global Mortgage Insurance put up a robust performance, long-term care insurance witnessed progress on rate actions and the company garnered benefits from the expense reduction initiatives.

Given better performance in the first half, Genworth expects U.S. mortgage insurance to be profitable in 2013 and for 2014 to be marked by even better results.

In an effort to enhance its operational performance, in June this year, Genworth Financial decided to sever 400 positions. Genworth will have $80 to $90 million in annual pre-tax expense savings when the plan is fully implemented.

Additionally, in third quarter last year, Genworth filed for rate increases for its long term care in force premium. The company expects $200 to $300 million of additional annual premiums after full implementation over the next five years. As of Jun 30, 2013, it received approvals of approximately $115 to $120 million of the targeted premium increase.

The Zacks Consensus Estimate for 2013 and 2014 is currently pegged at $1.16 and $1.45 respectively. The estimates translate to a year-over-year increase of 43.6% and 24.4% respectively.

Other Stocks to Consider

China Life Insurance Co. Ltd. (LFC - Analyst Report) with Zacks Rank #1 (Strong Buy) and Lincoln National Corporation (LNC - Analyst Report) and StanCorp Financial Group Inc. (SFG - Analyst Report) with Zacks Rank #2 (Buy) are also worth considering.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SYNAPTICS I… SYNA 78.11 +8.14%
CENTURY ALU… CENX 19.88 +5.74%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
THE PANTRY… PTRY 18.41 +2.79%