Genworth Financial 3Q21 Earnings Analysis
Updated: Nov 10, 2021
Catalysts
Partial IPO of Enact generated $535 million for Genworth Financial, which they used to repay part of their debts, that is, $296 million of the AXA Promissory notes
Still owns 81.6% of Enact, currently valued at $3.07 billion
Rising demand for housing
Record Low Mortgage rate further increases demand for mortgages and consequently mortgage insurance
Asset price inflation - further increase in housing prices
Can buyback more debt, and possibly buyback shares and pay dividends
Risks
Rising mortgage rates
Emerging Housing bubble
Rising liabilities of Life Insurance Business
Most of the profits come from the US Mortgage Insurance Business
Low interest rates
Financial Analysis
Valuation
My personal Biases
6.1% of my portfolio with 5.7% in competitor, Essent Group
First invested for arbitrage opportunity
Assumptions
FCF of $1.8 Billion a year discounted at 15% till judgment day
We will look at exit multiples of book value for 2026 with current BVPS at $30.1
Conclusion
No need to complex analysis to see how undervalued the stock is
Enact could increase the valuation multiples on it
Intrinsic value of $12 Billion with expected returns of 24% per year
Full Analysis and Research: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/24173712
