Will Genworth (GNW) Miss Earnings Estimates This Season?


Genworth Financial, Inc. (GNW) is set to report second-quarter 2014 results on Jul 29 after the market closes. Last quarter, the company posted an 8.33% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing This Past Quarter

A low interest rate environment, which is creating pressure on investment income, is expected to weigh on the bottom line of Genworth in the second quarter.

In addition, the introduction of products and pricing changes in the U.S. Life Insurance Division might weigh on life insurance sales and long-term care insurance sales. Loss ratio is also expected to increase.

However, improving performance at the mortgage insurance division and approval of rate increases will somewhat check the downside.

Earnings Whispers

Our proven model does not conclusively show that Genworth is likely to beat earnings estimate this quarter because it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP:  Genworth has an Earnings ESP of -2.86%. That is because the Most Accurate Estimate stands at 34 cents while the Zacks Consensus Estimate is higher at 35 cents.

Zacks Rank: Genworth has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a combination of Zacks Rank #3 and a -2.86% Earnings ESP make surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:  

Arch Capital Group Ltd. (ACGL), Earnings ESP of +5.10% and a Zacks Rank #2 (Buy).

Unum Group (UNM), Earnings ESP of +1.15% and a Zacks Rank #3.

Protective Life (PL), Earnings ESP of +0.83% and a Zacks Rank #3.

Read the Full Research Report on GNW
Read the Full Research Report on UNM
Read the Full Research Report on PL
Read the Full Research Report on ACGL

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