Genworth Financial, Inc. GNW is set to report second-quarter 2015 results on Aug 5 after the market closes. Last quarter, the company posted a 19.23% surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Genworth Financial’s mortgage business is expected to deliver another quarter of solid performance.
While Life Insurance is likely to report improved results, Long Term Care Insurance might have remained soft. Yet, management does not expect the increase in permanent life product sales to compensate for the moderation in sales of term life insurance products.
Improving employment rate and home prices are expected to have a positive influence on the to-be reported quarter.
However, a soft interest rate environment might hurt investment results again and reinvestment yields might have remained weak.
Unfavorable foreign exchange is also likely to have been a dampener.
Earnings Whispers
Our proven model does not conclusively show that Genworth Financial is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Genworth Financial has 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 26 cents.
Zacks Rank: Genworth Financial carries a Zacks Rank #3 (Hold). In spite of a favorable Zacks Rank which increases the predictive power of ESP, the company also needs a positive ESP for us to take an earnings call.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Primerica, Inc. PRI with Earnings ESP of +2.15% and a Zacks Rank #2 (Buy).
American Financial Group Inc. AFG with Earnings ESP of +6.61 % and a Zacks Rank #3.
American International Group, Inc. AIG with Earnings ESP of +3.28% and a Zacks Rank #3.
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