Genworth: Rock-Bottom Value With Insiders Buying Now

May.11.12 | About: Genworth Financial, (GNW)

Genworth Financial, Inc. (NYSE:GNW) shares have dropped like a rock. Just a few weeks ago this stock was trading over $9 per share, but the company announced it would postpone an initial public offering for its mortgage insurance unit in Australia, and it reported lower than expected earnings. This company is still facing challenges with the mortgage insurance division, but it is making solid profits by offering long-term care insurance and other financial service products. The stock trades for a fraction of its book value which is $29.99 per share, and it also trades at a below average price to earnings ratio, at just around 4 times forward earnings.

The stock has stabilized after the big drop and appears to be putting in a rock-solid bottom at just under $6 per share. The shares might be poised for a rebound in the coming days. One catalyst that could be a sign for investors to start buying before a rebound is the fact that a couple of Genworth insiders recently bought shares, and one purchase was significant, here are the two insider buys:

  1. On May, 7, 2012, James A. Parke (a director) bought 25,000 shares, in a transaction valued at about $140,000.
  2. Also on May 7, 2012, Thomas E. Moloney, (a director) bought 1,000 shares in a transaction valued at about $5,700.

Key Data Points For Genworth From Yahoo Finance:

  • Current price: $5.67
  • 52-Week Range: $4.80 to $12.55
  • Dividend: none
  • 2012 Earnings Estimate: 82 cents per share
  • 2013 Earnings Estimate: $1.47 per share
  • P/E Ratio: about 4 times forward earnings

MGIC Investment Corporation (NYSE:MTG) shares have been hit hard but this company might have less chance of a rebound since it does not have the profitable lines of business like long-term care that Genworth has. In fact, when you consider that Genworth is profitable now and is expected to grow profits in the coming years, while this company is losing money, it makes Genworth shares look remarkably cheap.

Key Data Points For From Yahoo Finance:

  • Current price: $3.16
  • 52-Week Range: $1.51 to $8.42
  • Dividend: none
  • 2012 Earnings Estimate: a loss of $1.64 per share
  • 2013 Earnings Estimate: a loss of 49 cents per share
  • P/E Ratio: n/a due to ongoing losses

Data is sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.

Disclosure: I am long GNW.