Trade-Ideas: Genworth Financial (GNW) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Genworth Financial ( GNW) as a post-market leader 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 $81.0 million.
  • GNW is up 2.4% today from today's close.

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More details on GNW:

Genworth Financial, Inc. provides insurance, retirement, and homeownership solutions in the United States and internationally. It operates through U.S. Life Insurance, International Mortgage Insurance, U.S. Mortgage Insurance, International Protection, and Runoff segments. The U.S. Currently there are 4 analysts that rate Genworth Financial a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Genworth Financial has been 7.6 million shares per day over the past 30 days. Genworth Financial has a market cap of $4.1 billion and is part of the financial sector and insurance industry. The stock has a beta of 2.25 and a short float of 3.4% with 1.98 days to cover. Shares are down 3.8% year-to-date as of the close of trading on Wednesday.

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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 deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Insurance industry average. The net income has decreased by 16.3% when compared to the same quarter one year ago, dropping from $184.00 million to $154.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
  • The gross profit margin for GENWORTH FINANCIAL INC is rather low; currently it is at 17.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.59% trails that of the industry average.
  • Looking at the price performance of GNW's shares over the past 12 months, there is not much good news to report: the stock is down 54.70%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • GENWORTH FINANCIAL INC's earnings per share declined by 16.2% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GENWORTH FINANCIAL INC swung to a loss, reporting -$2.51 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus -$2.51).

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