Tags: Genworth | Financial | value | GNW

Genworth Financial May Be Good Financial Value Play

By Greg Brown   |   Wednesday, 05 Sep 2012 02:50 PM

Genworth Financial (GNW) may be a good value play in the financial sector, according to analysts. The insurance giant has taken it on the chin, but sellers are overlooking the company’s rock-solid condition, they say.

Genworth Financial provides insurance, wealth management, investment and financial solutions to more than 15 million customers with a presence in more than 25 countries.

Genworth “life security” products and services include payment protection coverages in Europe, Canada and Mexico, and in the United States; life insurance products; as well as care coordination and wellness services. The company also provides various types of annuity and guaranteed retirement income products, as well as individual and group long-term care insurance.

In additional, GNW sells wealth management products that include financial planning services and managed accounts, enables homeownership in the United States and internationally by providing mortgage insurance products.

“Across all of our businesses, we differentiate through product innovation and by providing valued services such as education and training, wellness programs, support services and technology linked to our insurance, investment and financial products that address both consumer and distributor needs,” Genworth said in a recent filing.

“In doing so, we strive to be easy to do business with and help our business partners grow more effectively.”

Genworth Financial has a market cap of $2.58 billion in a sector, insurance, where the average company size is $13.2 billion. Its trailing 12-month P/E ratio is 9.91. Its projected earnings per share growth for the coming year is 98.44 percent, compared to a sector average of 7.62 percent.

Profitable


Analysts are positive on GNW, with buy or outperform calls from Sandler O’Neill and Standard & Poor’s Equity Research.

“Our buy recommendation reflects GNW's steep valuation discount versus peers, and our belief that the valuation does not properly reflect improving fundamentals and a strengthened balance sheet. While the mortgage insurance business will likely remain unprofitable near term, we expect losses to narrow and eventually become profitable,” S&P analysts wrote on Aug. 2.

“We think fixed annuities and international protection will face headwinds owing to low interest rates and economic pressures in Europe.We see price increases and product re-designs helping profitability in the life insurance and long-term care businesses.”

Genworth Financial next reports on Nov. 1.

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