Genworth Financial 3Q21 Earnings Analysis

Updated: Nov 10, 2021


Genworth Financial Stock Analysis

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


Genworth Financial Stock Analysis

Genworth Financial Stock 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


Genworth Financial Stock Analysis

  • We will look at exit multiples of book value for 2026 with current BVPS at $30.1

Genworth Financial Stock Analysis

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

Genworth Financial Stock Analysis



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