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Genworth Financial (GNW) Q2 Earnings: What's in Store?
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Genworth Financial, Inc. (GNW - Free Report) is set to report second-quarter 2016 results on Aug 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 50%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Genworth Financial’s mortgage insurance segment is likely to report profits, primarily due to better performing U.S. Mortgage Insurance. Further, the life insurer might experience earnings improvement in the to-be-reported quarter driven by the solid execution of its commercial strategy and a continued reduction in delinquencies from the 2005 through 2008 books of business.
In addition, the company is likely to witness an increase in new insurance written in the second quarter. A gradual improvement in the U.S. housing market, strong loss mitigation programs and a growing private mortgage insurance market are expected to drive the upside.
Moreover, the company is anticipated to have reduced its overall U.S. Life Insurance and headquarters expenses on an annualized basis, in the to-be-reported quarter. This should also have a favorable impact on the upcoming earnings.
However, the company might face a decline in investment results owing to a low interest rate environment. Also, the company is likely to post lower Long Term Care (LTC) sales owing to the pricing changes implemented in the U.S. Life Insurance Division.
With respect to surprise trend, the company missed the Zacks Consensus Estimate in three of the last four quarters with an average negative earnings surprise of 45.53%.
Our proven model does not conclusively show that Genworth Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Genworth Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 21 cents.
Zacks Rank: Genworth Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +7.55% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 3.
Manulife Financial Corporation (MFC - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 4.
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +1.47% and a Zacks Rank #2. The company is slated to report second-quarter earnings on Aug 10.
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Genworth Financial (GNW) Q2 Earnings: What's in Store?
Genworth Financial, Inc. (GNW - Free Report) is set to report second-quarter 2016 results on Aug 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 50%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Genworth Financial’s mortgage insurance segment is likely to report profits, primarily due to better performing U.S. Mortgage Insurance. Further, the life insurer might experience earnings improvement in the to-be-reported quarter driven by the solid execution of its commercial strategy and a continued reduction in delinquencies from the 2005 through 2008 books of business.
In addition, the company is likely to witness an increase in new insurance written in the second quarter. A gradual improvement in the U.S. housing market, strong loss mitigation programs and a growing private mortgage insurance market are expected to drive the upside.
Moreover, the company is anticipated to have reduced its overall U.S. Life Insurance and headquarters expenses on an annualized basis, in the to-be-reported quarter. This should also have a favorable impact on the upcoming earnings.
However, the company might face a decline in investment results owing to a low interest rate environment. Also, the company is likely to post lower Long Term Care (LTC) sales owing to the pricing changes implemented in the U.S. Life Insurance Division.
With respect to surprise trend, the company missed the Zacks Consensus Estimate in three of the last four quarters with an average negative earnings surprise of 45.53%.
GENWORTH FINL Price and EPS Surprise
GENWORTH FINL Price and EPS Surprise | GENWORTH FINL Quote
Earnings Whispers
Our proven model does not conclusively show that Genworth Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Genworth Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 21 cents.
Zacks Rank: Genworth Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +7.55% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 3.
Manulife Financial Corporation (MFC - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 4.
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +1.47% and a Zacks Rank #2. The company is slated to report second-quarter earnings on Aug 10.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>