Will Genworth (GNW) Disappoint This Earnings Season? - Analyst Blog

Genworth Financial Inc. GNW is set to report its first-quarter 2014 results on April 29. Last quarter, the company had posted an impressive 26.67% positive earnings surprise. Let's see how things are shaping up for this announcement.

Factors this Past Quarter

Approvals for rate increases for its long-term care in force premium are expected to improve premiums in the quarter.

Lower new delinquency development and effective loss mitigation programs along with changes in aging of existing delinquencies should continue to aid favorable mortgage insurance results at Genworth.

However, the introduction of new products and pricing changes in the U.S. Life Insurance Division will likely weigh on sales until the new product gains hold in the market and the company expands its distribution reach.

Earnings Whispers?

Our proven model does not conclusively show that Genworth is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Genworth has a 0.00% Zacks ESP. That is because the Most Accurate Estimate as well as the Zacks Consensus Estimate stands at 36 cents, leading to a difference of zero.
 
Zacks Rank #3: Genworth's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Primerica, Inc. PRI, earnings ESP of +1.22% and a Zacks Rank #2 (Buy).

Sun Life Financial Inc. SLF with Earnings ESP of +3.08% and Zacks Rank #2.

American International Group Inc. AIG with Earnings ESP of +0.94% and Zacks Rank #3 (Hold).