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Genworth (GNW) Q1 Earnings: Surprise in Store for Stock?

Zacks Equity Research
Updated

Genworth Financial, Inc. GNW is scheduled to report first-quarter results after the closing bell on Apr 28. In the last quarter, this company delivered a 180.95% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing This Past Quarter

Given Genworth’s decision to stall sales of traditional life insurance and fixed-annuity products in the first quarter of 2016, the company is estimated to record a $15 million pretax restructuring charge. A soft interest rate environment is expected to keep investment results under pressure. Also, unfavorable foreign exchange might weigh on its performance.

The mortgage insurance business is expected to perform well in the quarter. Initiatives to lower expenses are likely to aid margin expansion. Premiums too may have benefited from long-term care rate actions.

Genworth delivered earnings surprises in only one of the last four quarters, with an average miss of 53.22%.

 

Genworth’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the company’s first-quarter performance.

Earnings Whispers

Our proven model does not conclusively show that Genworth will beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Genworth’s Most Accurate estimate is pegged at 13 cents per share, which is below the Zacks Consensus Estimate of 14 cents. The Earnings ESP is thus -7.14%.

Zacks Rank: Genworth has a Zacks Rank #5 (Strong Sell), which decreases the predictive power of ESP. Moreover, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Radian Group, Inc. RDN has an Earnings ESP of +26.67% and a Zacks Rank #3. The company is slated to report first-quarter earnings results on Apr 27.

Lincoln National Corp. LNC has an Earnings ESP of +0.67% and a Zacks Rank #3. The company is set to report first-quarter earnings results on May 4.

Prudential Financial, Inc. PRU has an Earnings ESP of +0.42% and a Zacks Rank #2. The company is likely to report first-quarter earnings results on May 4.
 

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GENWORTH FINL (GNW): Free Stock Analysis Report
 
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Zacks Investment Research