Genworth Financial (GNW) Could Double - Barron's
Tweet
Share
E-mail
Get Alerts GNW Hot Sheet
Join SI Premium – FREE
Shares of Genworth Financial (NYSE: GNW) are sharply higher in pre-open trading Monday following a bullish Barron's piece this weekend suggesting the stock price could double.
The periodical said the resurgence of the U.S. mortgage market provides the company with its best opportunity to grow in years. In addition to bullish housing stats, the Federal Housing Administration (FHA) - which has controlled up to 75% of the mortgage insurance market - is pulling back. In a statement last week, the head of the government agency that overseas the FHA said they wanted "to encourage private capital back into the market."
Genworth is currently ranked 4th in the mortgage-insurance market behind MGIC Investment (NYSE: MTG) and Radian Group's (NYSE: RDN) Radian Guaranty unit. Mortgage-insurance production at Genworth was up 9% in the fourth quarter and the company expects the unit to return to profitability.
Despite a sharp rebound in the stock, at $9.65, Genworth trade at just 0.3 times book value, Barron's notes. P/E is 8x 2013 earnings estimates versus a P/E between 12-18 times forward earnings before the financial crisis. Given expected EPS of $1.45 in 2014, it could be argued that the stock could trade at $17.40-$26.10 based on these multiples. David Marcus, co-founder of Evermore Global Advisors, is more conservative and pegs the value of GNW at $18 per share or more.
The periodical said the resurgence of the U.S. mortgage market provides the company with its best opportunity to grow in years. In addition to bullish housing stats, the Federal Housing Administration (FHA) - which has controlled up to 75% of the mortgage insurance market - is pulling back. In a statement last week, the head of the government agency that overseas the FHA said they wanted "to encourage private capital back into the market."
Genworth is currently ranked 4th in the mortgage-insurance market behind MGIC Investment (NYSE: MTG) and Radian Group's (NYSE: RDN) Radian Guaranty unit. Mortgage-insurance production at Genworth was up 9% in the fourth quarter and the company expects the unit to return to profitability.
Despite a sharp rebound in the stock, at $9.65, Genworth trade at just 0.3 times book value, Barron's notes. P/E is 8x 2013 earnings estimates versus a P/E between 12-18 times forward earnings before the financial crisis. Given expected EPS of $1.45 in 2014, it could be argued that the stock could trade at $17.40-$26.10 based on these multiples. David Marcus, co-founder of Evermore Global Advisors, is more conservative and pegs the value of GNW at $18 per share or more.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- SanDisk stock target lifted at Bernstein to $3000 on new memory LTAs
- Piper Sandler picks Payments and Consumer Finance winners as multiples reset
- Visa, Stripe Among Firms Joining Forces on Mainstream Stablecoin - Bloomberg
Create E-mail Alert Related Categories
Insiders' Blog, Trader TalkRelated Entities
Barron's, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
