Genworth Financial, Inc. (GNW) is set to report third-quarter 2014 results on Nov 5 after the market closes. Last quarter, the company posted an 11.43% negative earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Life insurance sales and long-term care insurance sales are expected to witness a decline in the quarter owing to pricing changes in the U.S. Life Insurance Division implemented over the past couple of years. In addition, loss ratio is likely to increase.
Investment results will likely be hurt by a low interest rate environment.
Nonetheless, better performing mortgage insurance division will act a cushion. Rate increase approvals will also aid the upside.
Earnings Whispers
Our proven model does not conclusively show that Genworth Financial will 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 an Earnings ESP of -43.75%. This is because the Most Accurate estimate stands at 9 cents and the Zacks Consensus Estimate stands at 16 cents.
Zacks Rank: Genworth Financial’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, when combined with a negative ESP, surprise prediction becomes difficult.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Navigators Group Inc. (NAVG), Earnings ESP of +10.19 and a Zacks Rank #2 (Buy).
American International Group, Inc. (AIG), Earnings ESP of +0.93% and a Zacks Rank #2
Portfolio Recovery Associates Inc. (PRAA), Earnings ESP of +0.90% and a Zacks Rank #2.
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