News Flash: 3 Analysts Think Genworth Mortgage Insurance Australia Limited (ASX:GMA) Earnings Are Under Threat
Today is shaping up negative for Genworth Mortgage Insurance Australia Limited (ASX:GMA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. The stock price has risen 5.0% to AU$2.95 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the most recent consensus for Genworth Mortgage Insurance Australia from its three analysts is for revenues of AU$356m in 2022 which, if met, would be a substantial 36% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to decline 14% to AU$0.34 in the same period. Previously, the analysts had been modelling revenues of AU$405m and earnings per share (EPS) of AU$0.41 in 2022. Indeed, we can see that the analysts are a lot more bearish about Genworth Mortgage Insurance Australia's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Genworth Mortgage Insurance Australia
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Genworth Mortgage Insurance Australia is forecast to grow faster in the future than it has in the past, with revenues expected to display 84% annualised growth until the end of 2022. If achieved, this would be a much better result than the 6.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.2% per year. Not only are Genworth Mortgage Insurance Australia's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Genworth Mortgage Insurance Australia, and their negativity could be grounds for caution.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Genworth Mortgage Insurance Australia going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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