Can Lower Revenues Affect Genworth's (GNW) Q3 Earnings?
Genworth Financial, Inc. GNW is slated to report third-quarter 2017 results on Nov 2, after the market closes. Last quarter, the company delivered a positive earnings surprise of 36.36%. Let’s see how things are shaping up for this announcement.
Factors to be Considered This Quarter
Genworth has likely reported lower revenues in the soon-to-be-reported quarter, mainly due to decline in premiums and lower policy fees and other income. In fact, the Zacks Consensus Estimate for revenues is currently pegged at $2.12 billion, which represents a slip of 0.7% from the year-ago quarter.
Also, the company is likely to have witnessed a decline in sales volume in the third quarter due to the implementation of new products and pricing changes.
Further, the company has likely incurred higher total benefits and expenses, primarily driven by an increase in interest credited, along with higher acquisition and operating expenses, net of deferrals and interest expense.
However, with rising interest rate environment, the company has likely displayed improvement in net investment income in the third quarter.
Additionally, Genworth’s mortgage insurance business has likely generated profits, fueled by a strong performance at the U.S. mortgage insurance segment.
Earnings Whispers
Our proven model does not conclusively show that Genworth is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.
Zacks ESP: Genworth has an Earnings ESP of -2.44%. This is because the Most Accurate estimate is pegged at 20 cents, lower than the Zacks Consensus Estimate’s 21 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Genworth Financial Inc Price and EPS Surprise
Genworth Financial Inc Price and EPS Surprise | Genworth Financial Inc Quote
Zacks Rank: Genworth carries a Zacks Rank #3 (Hold). Genworth carries a Zacks Rank #3 (Hold), which though increases the predictive power of ESP, a company however, needs a positive ESP to be confident about an earnings surprise.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the finance sector with the right combination of elements to surpass estimates this quarter are as follows:
Ares Capital Corporation ARCC is set to report third-quarter earnings on Nov 2 with an Earnings ESP of +2.86% and a Zacks Rank of 3 as well. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apollo Investment Corporation AINV has an Earnings ESP of +2.13%. The Zacks #3 Ranked company is slated to report third-quarter earnings on Nov 3.
American Equity Investment Life Holding Company AEL has an Earnings ESP of +0.40% and holds a Zacks Rank #2. The company is set to report third-quarter earnings on Nov 6.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>
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
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
Apollo Investment Corporation (AINV) : Free Stock Analysis Report
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Genworth Financial Inc (GNW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
