Genworth Financial Inc. (NYSE: GNW) has been down and out long enough that even the more aggressive turnaround investors had started to give up on it. Some investors even wondered if its long-term story was going to remain. This post-earnings reaction was so strong and had so many positive internals for the stock that many turnaround investors may need to reconsider how they want to treat Genworth ahead.
24/7 Wall St. wanted to take a 360-degree view all around the trading action to see if a turnaround is truly on the table here. This view almost aims to discount the news, but we would not want any turnaround investor to not consider the new fundamentals.
It is always important to realize just how much negativity has been circulating around Genworth. With all its problems, short sellers have been an influence. There were some 27.63 million shares in the mid-July short interest, down from 33.66 million at the end of June. Genworth has roughly 500 million shares outstanding, and 82% or so are owned by institutions.
The internal metrics of the trading looked great as well. On the day, Genworth closed up $0.76 at $3.51. That is a 27.6% gain. Earlier in the day, Reuters said that Genworth was poised to have its best day in a whopping seven years. That is no small feat. The $3.51 close was not on the high of the day but was right in the middle of the $3.32 to $3.73 daily range. It was also above the $3.43 opening bell price.
Another issue that makes this move impressive is that trading volume was over 33.4 million shares. This is more than four times the normal 7.28 million shares on an average trading day. Also worth noting is that this was the largest volume since the 41.1 million shares traded on June 24, 2016, when the stock fell to $3.05 from $3.36 the prior day. That June drop saw shares continue to go down the following days, so it will be important to see if these gains continue in the days ahead.
Genworth beat estimates on earnings and on revenues, as there was 24.5% growth in U.S. mortgage insurance segment. Effectively this is on top of some positive data inside the first-quarter report. Life insurance had income of $31 million, flat from the prior quarter but up from $22 million a year ago.
What else may matter here is that the consensus analyst price target was $3.21 on last look. Only three analysts have ratings of Buy or higher, six are at Hold/Neutral and one still has a Sell/Underperform rating. We have included several pre-earnings analyst summaries with commentary for viewing.