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What's in the Cards for Genworth (GNW) This Earnings Season?

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Genworth Financial Inc. (GNW - Free Report) is slated to report second-quarter 2018 results on Jul 31 after the market closes. In the first quarter of 2018, the company surpassed the Zacks Consensus Estimate by 8.70%.

Let’s see how things are shaping up for this announcement.

Genworth is expected to have benefited from another quarter of improved U.S. Mortgage Insurance results. U.S. Mortgage Insurance is likely to have delivered a solid performance on the strength of an improving U.S. housing market, solid insurance in force growth, strong loss mitigation programs, a growing private mortgage insurance market and lower delinquency.

Premiums are expected to have increased during the second quarter from a sturdy insurance in force and rate raises. Investment income has possibly been driven by a progressing rate environment. These together might have aided the company’s top-line improvement in the to-be-reported quarter. The Zacks Consensus Estimate for revenues in the quarter under review is pegged at $2.15 billion, up 1.1% year over year.

Results at U.S. Life Insurance Division are likely to have been stressed by lower sales of Long Term Care as well as Life Insurance.

Nonetheless, a lower tax incidence should boost the bottom line.

The Zacks Consensus Estimate for second-quarter earnings stands at 27 cents, down 10% year over year.

With respect to its positive surprise trend, the company delivered an earnings beat in three of the last four quarters with an average beat of 60.37%.

Genworth Financial, Inc. Price and EPS Surprise

What the Quantitative Model Predicts

Our proven model does not conclusively show that Genworth is likely to beat estimates this yet-to-be-reported quarter. This is because a stock needs to have the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for an earnings beat. But that is not the case here as elaborated below.

Earnings ESP: Genworth has an Earnings ESP of 0.00%. This is because both he Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 27 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Genworth carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to exceed estimates this time around are as follows:

Prudential Financial, Inc. (PRU - Free Report) is set to report second-quarter earnings on Aug 1. The stock has an Earnings ESP of +0.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

XL Group Ltd. has an Earnings ESP of +6.37% and a Zacks Rank of 3. The company is scheduled to announce second-quarter earnings on Jul 31.

American Financial Group, Inc. (AFG - Free Report) has an Earnings ESP of +1.68% and is a Zacks #2 Ranked player. The company is expected to release second-quarter earnings on Aug 1.

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