Genworth Financial Inc. (NYSE:GNW) is slated to report first-quarter 2018 results on May 1 after the market closes. In the fourth quarter of 2017, the company surpassed the Zacks Consensus Estimate by 225%.
Let’s see, how things are shaping up for this announcement.
Genworth is expected to have witnessed better performance at its U.S. Mortgage Insurance. Improving U.S. housing market, solid insurance in force growth, strong loss mitigation programs, growing private mortgage insurance market and lower delinquency are anticipated to have driven this segmental performance. The Zacks Consensus Estimate for adjusted operating income is pegged at $96 million.
An improving rate environment is likely to have aided investment results in the first quarter. The Zacks Consensus Estimate for the metric is pegged at $802 million.
Rate increase approved over time and a solid insurance in force are expected to have improved premium. The consensus mark for the metric stands at $1.1 billion.
Long Term Care as well as Life Insurance sales are likely to have remained soft in the first quarter due to pricing changes in the U.S. Life Insurance Division. Though management is adopting several new product and distribution strategies, it anticipates sales to be affected by lower ratings in the future.
Nonetheless, lower tax incidence, courtesy of a new, reduced tax rate might have possibly guarded the bottom line.
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 66.15%.
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.
Zacks ESP: Genworth Financial has an Earnings ESP of -17.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Genworth Financial, Inc. Price and EPS Surprise
Zacks Rank: Genworth Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company needs to have a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.
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 insurance industry with the right combination of elements to outshine estimates this time around are as follows:
Cigna Corporation (NYSE:CI) is set to report first-quarter earnings on May 3. The stock has an Earnings ESP of +0.62% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Allstate Corporation (NYSE:ALL) has an Earnings ESP of +3.55% and is a Zacks #3 Ranked player. The company is scheduled to announce first-quarter earnings on May 1.
American Financial Group, Inc. (NYSE:AFG) has an Earnings ESP of +4.46% and a Zacks Rank #2. The company is slated to release first-quarter earnings on May 2.
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Genworth Financial, Inc. (GNW): Free Stock Analysis Report
Cigna Corporation (CI): Free Stock Analysis Report
The Allstate Corporation (ALL): Free Stock Analysis Report
American Financial Group, Inc. (AFG): Free Stock Analysis Report
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