This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Genworth's Down Under for a Reason

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.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,120.02 +68.29 0.40%
S&P 500 1,985.39 +11.76 0.60%
NASDAQ 4,461.3960 +36.6920 0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs