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Genworth (GNW): What's in Store This Earnings Season?

Genworth Financial, Inc.GNW is set to report fourth-quarter 2015 results on Feb 5 after the market closes. Last quarter, the company posted a -43.48% surprise. Let's see how things are shaping up for this announcement.

Factors Influencing This Past Quarter

On account of the deal to sell its European mortgage insurance business to AmTrust Financial Services, the insurer is expected to record an after-tax GAAP loss of about $140 million in the fourth quarter of 2015.

The company is estimated to have cut cash expenses by $30 million in 2015. This in turn should favor margin expansion.

However, a soft interest rate environment is likely to lower reinvestment yields and affect investment yields in the quarter.

Sales at U.S. Life Insurance are likely to have remained soft in the October-December period.

Nonetheless, Genworth Financial's mortgage business is well positioned to have delivered another quarter of solid performance. This division is likely to have been favorably impacted by an improving employment rate and higher home prices.

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, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP : Genworth Financial has -9.52% Earnings ESP. This is because the Most Accurate estimate is pegged at 19 cents and the Zacks Consensus Estimate is higher at 21 cents.

Zacks Rank: Genworth Financial carries a Zacks Rank #3 (Hold). But apart from a favorable Zacks Rank, which increases the predictive power of ESP, we must also have a positive ESP for an earnings call.

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

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:

The Hartford Financial Services Group, Inc. HIG , Earnings ESP of +1.02% and a Zacks Rank #2 (Buy). The company is scheduled to report fourth-quarter earnings results on Feb 4.

PartnerRe Ltd. PRE , Earnings ESP of +9.84% and a Zacks Rank #1 (Strong Buy).The company is scheduled to report fourth-quarter earnings results on Feb 8.

Assurant Inc. AIZ , Earnings ESP of +1.31% and a Zacks Rank #3 (Hold).The company is scheduled to report fourth-quarter earnings results on Feb 9.

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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

GENWORTH FINL (GNW): Free Stock Analysis Report

ASSURANT INC (AIZ): Free Stock Analysis Report

HARTFORD FIN SV (HIG): Free Stock Analysis Report

PARTNERRE LTD (PRE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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