GNW has book value of $24.25, and assets of over $100B, GNW is a big solid financial insurer. Want to know what book value means to GNW:
Book value is the accounting value of a firm. It has two main uses:
1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated.
2. By being compared to the company's market value, the book value can indicate whether a stock is under- or overpriced.
3. In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment. http://www.investopedia.com/terms/b/bookvalue.asp
Another way to look at GNW's current valuation is this: EVEN.. if GNW's book value was only half that amount ($12/sh) and next year's earnings were only $1/sh, instead of the current $2/sh estimate,GNW would STILL..be a steal and here's why: If GNW ONLY....traded at a modest 10 times next years earnings of $1/sh, GNW would trade at 10/sh; that's almost 4 times the current sh price. Also, after the recession ends and revenues stabilize GNW and peer group companies will again trade for 1 to 2 times book value. Again, EVEN..if GNW's book value fell to only 12/sh(which I believe will not happen), GNW would eventually sell for a MULTIPLE...of book value (12-24/sh). From under 3/sh, that's a HUGE...move for longs. That's why longs are here and the smart ones are aggressively ADDING....to existing positions.