Story updated at 10 a.m. to reflect market activity.
Shares of Genworth Financial gained 1.4% to $17.80 in morning trading
The firm maintained its "buy" rating for the company. The return of capital return is a key positive catalyst for Genworth according to analysts Suneet Kamath, Daniel Bergman, and Humphrey Lee.
The analysts wrote, "Based on the combination of YE 2013 statutory results and our expectations for 2014/15 financial performance, we argue that management could be in a position to discuss the resumption of capital return with greater clarity and certainty by YE 2014, assuming no business unit sales. Importantly, our current EPS and ROE forecasts for GNW continue to assume no capital return through 2018, suggesting the potential for positive revisions."
Must read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates GENWORTH FINANCIAL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GENWORTH FINANCIAL INC (GNW) a BUY. This is driven by a few notable 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, largely solid financial position with reasonable debt levels by most measures, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 27.27% and other important driving factors, this stock has surged by 59.08% 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 has improved earnings per share by 27.3% 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 $1.15 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $1.15).
- Despite the weak revenue results, GNW has outperformed against the industry average of 19.1%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. 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 0.52, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, GENWORTH FINANCIAL INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: GNW Ratings Report