On Jan 6, 2014, shares of
Genworth Financial Inc
) hit a new 52-week high of $16.01.
GENWORTH FINL (GNW): Free Stock Analysis
LINCOLN NATL-IN (LNC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
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The momentum was driven by continued solid performance at the
company, and increased focus on strengthening its operational
results and balance sheet.
Genworth divested its wealth management business to better focus
on capital generation, increase the financial strength and
flexibility of the company as well as simplify the business
Additionally, for the sixth consecutive quarter, the mortgage
insurance segment generated profits. Year-to-date loss mitigation
savings were $439 million, well above the full-year target of
$250 million to $350 million, as flow modifications remained
Genworth also got approvals of approximately $155 to $160 million
of the targeted premium increase for its long-term care in force
premium from 31 states. The company has also started filing
for 6% to 13% rate increases on long-term care products. Genworth
expects $250-$300 million of additional annual premiums (up from
$200-300 million) when fully implemented over the next five
Genworth has been strengthening its financial position. The
company addressed its debt maturities till Dec 2016. Issuance of
$400 million in new debt and a new 3-year credit facility of $300
million increased financial flexibility of the company.
With respect to earnings trend, Genworth delivered positive
earnings surprises in 2 of the past 4 quarters, with an average
beat of 6.8%.
The Zacks Consensus Estimate for 2013 and 2014 is currently
pegged at $1.10 and $1.43 respectively. These translate to
respective potential year-over-year improvement of 35.5% and
30.2%. The expected long-term growth rate for the stock is 5%.
However, valuation for Genworth looks attractive. The shares are
trading at a 37% discount to the peer group average on a forward
price-to-earnings basis and at a 9% premium on a price-to-book
basis. Return on equity, on the other hand, is 26% higher than
the peer group average. The 1-year return from the stock of 90.6%
is higher than the S&P's return of 24.6%.
Genworth presently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks worth considering in the life insurance
Lincoln National Corp.
Protective Life Corp.
Reinsurance Group of America Inc
). All these stocks sport a Zacks Rank #2 (Buy).