Trade-Ideas LLC identified

Genworth Financial

(

GNW

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Genworth Financial as such a stock due to the following factors:

  • GNW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.0 million.
  • GNW has traded 578,621 shares today.
  • GNW is up 3.1% today.
  • GNW was down 5.1% yesterday.

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More details on GNW:

Genworth Financial, Inc. provides insurance and homeownership solutions in the United States and internationally. It operates through five segments: U.S. Mortgage Insurance, Canada Mortgage Insurance, Australia Mortgage Insurance, U.S. Life Insurance, and Runoff. The U.S. Currently there are 2 analysts that rate Genworth Financial a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Genworth Financial has been 8.0 million shares per day over the past 30 days. Genworth Financial has a market cap of $1.9 billion and is part of the financial sector and insurance industry. The stock has a beta of 2.76 and a short float of 5% with 5.60 days to cover. Shares are down 4.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Genworth Financial as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 65.6% when compared to the same quarter one year ago, falling from $154.00 million to $53.00 million.
  • Net operating cash flow has significantly decreased to $256.00 million or 58.97% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.45%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 54.83% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The gross profit margin for GENWORTH FINANCIAL INC is rather low; currently it is at 21.51%. Regardless of GNW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.96% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Insurance industry and the overall market, GENWORTH FINANCIAL INC's return on equity significantly trails that of both the industry average and the S&P 500.

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