NEW YORK ( TheStreet) --If you invested in an S&P 500 financial stock at the start of the year, you had to work very hard to lose money.
Out of the 85 financial stocks in that index, just three had negative returns year to date through Thursday and two of them-- Assurant (AIZ) and People's United Bancorp , were down by roughly one percent each.
The only real loser, then, is Genworth Financial (GNW), down 9.16%. So it makes sense to wonder whether Genworth, which reports first quarter earnings Wednesday, is worth a gamble. Can it really be so much worse than the other 84 stocks?
The answer is probably not but it still may not be the best place to make your wager.Genworth's big problem coming out of the 2008 crisis has been its mortgage insurance unit. Mortgage insurance is simply not a business you want to be in when a housing crisis hits, and all the mortgage insurers have been highly volatile and risky plays ever since. Still, Genworth was up nearly 18% this year until April 17, when it announced it would postpone plans for an initial public offering of its Australian mortgage business due to poor performance of the unit. That sent shares plunging 24%. The bull case on Genworth is that the shares are really cheap. According to Sandler O'Neill analyst Ed Shields, Genworth shares trade at just of estimated 2012 fourth quarter book value and at 4.1 times his 2013 earnings estimate. Life insurance peers are trading at an average of 71% of current book values and at 6.9 times 2013 earnings. Shields has a "buy" on the stock and a $10.50 price target versus Friday's closing price of $5.99. Bank of America Merrill Lynch analyst Edward Spehar has an "underperform" rating and an $8 price target, however, arguing investors looking for high beta insurance names would do better with Lincoln National LNC. "We see materially less fundamental risk for Lincoln National than we do for Genworth, and the substantial difference in cash payouts to shareholders (more than 50% of earnings for Lincoln versus 0% of earnings for Genworth) supports our view," Spehar writes.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV