Why Genworth Financial (GNW) Is Up Today

NEW YORK (TheStreet) -- Genworth Financial (GNW) was gaining 3.9% to $15.10 on Wednesday following the insurance provider's fourth-quarter earnings that beat estimates.

The life and mortgage insurer reported earnings of 38 cents a share for the quarter. Analyst surveyed by Thomson Reuters estimated earnings of 30 cents a share. The company posted revenue of $2.39 billion for the quarter, compared to analysts' estimates of $2.38 billion.

Genworth's U.S. mortgage business in particular fared well in the quarter, posting operating income of $6 million. In the year-ago quarter, the business posted a loss of $32 million. The business, and the company as a whole, benefited from the recovering U.S. housing market as more Americans bought homes because of lower mortgage rates.

TheStreet Ratings team rates GENWORTH FINANCIAL INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about its recommendation:

"We rate GENWORTH FINANCIAL INC (GNW) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 320.00% and other important driving factors, this stock has surged by 64.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GNW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • GENWORTH FINANCIAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GENWORTH FINANCIAL INC increased its bottom line by earning $0.56 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $0.56).
  • Net operating cash flow has significantly increased by 127.53% to $471.00 million when compared to the same quarter last year. In addition, GENWORTH FINANCIAL INC has also vastly surpassed the industry average cash flow growth rate of -27.66%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.

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