Can Genworth (GNW) Spring a Surprise this Earnings Season?
Genworth Financial, Inc. GNW will release first-quarter 2017 results on May 2, after the market closes. Last quarter, the company posted a negative earnings surprise of 288.57%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Genworth’s U.S. Mortgage Insurance is likely to deliver improved performance owing to the gradual improvement in the U.S. housing market, strong loss mitigation programs, growing private mortgage insurance market. Also, Canada MI increased its flow mortgage insurance premium rates for new insured mortgages, effective Mar 17, 2017.
A slight improvement in interest rate ratio, owing to two rate hikes (Dec 2016, Mar 2017) is expected to have favored investment results.
However, performance in U.S. Life Insurance Division is likely to have remained soft in the to-be-reported quarter.
With respect to surprise trend, the company delivered positive surprises in two of the last four quarters but with an average negative surprise of 161.31%.
Genworth Financial Inc Price and EPS Surprise
Genworth Financial Inc Price and EPS Surprise | Genworth Financial Inc 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 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Genworth Financial carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.
Conversely, 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 finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Prudential Financial Inc. PRU, which is set to report first-quarter earnings on May 3, has an Earnings ESP of +0.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial Group, Inc. AFG has an Earnings ESP of +0.73% and a Zacks Rank #3. The company is slated to report first-quarter earnings on May 3.
AerCap Holdings N.V. AER has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is set to report first-quarter earnings on May 9.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
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
Aercap Holdings N.V. (AER): Free Stock Analysis Report
Genworth Financial Inc (GNW): Free Stock Analysis Report
Prudential Financial, Inc. (PRU): Free Stock Analysis Report
American Financial Group, Inc. (AFG): Free Stock Analysis Report
To read this article on Zacks.com click here.
