Bearish: Analysts Just Cut Their Genworth Mortgage Insurance Australia Limited (ASX:GMA) Revenue and EPS estimates – Simply Wall St

Stock Analysis
Today is shaping up negative for Genworth Mortgage Insurance Australia Limited (ASX:GMA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. The stock price has risen 5.0% to AU$2.95 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After the downgrade, the three analysts covering Genworth Mortgage Insurance Australia are now predicting revenues of AU$356m in 2022. If met, this would reflect a major 36% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to sink 14% to AU$0.34 in the same period. Prior to this update, the analysts had been forecasting revenues of AU$405m and earnings per share (EPS) of AU$0.41 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.
See our latest analysis for Genworth Mortgage Insurance Australia
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Genworth Mortgage Insurance Australia's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Genworth Mortgage Insurance Australia is forecast to grow faster in the future than it has in the past, with revenues expected to display 84% annualised growth until the end of 2022. If achieved, this would be a much better result than the 6.6% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.2% annually. So it looks like Genworth Mortgage Insurance Australia is expected to grow faster than its competitors, at least for a while.
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Genworth Mortgage Insurance Australia. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Genworth Mortgage Insurance Australia, and their negativity could be grounds for caution.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates – from multiple Genworth Mortgage Insurance Australia analysts – going out to 2024, and you can see them free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Helia Group Limited, together with its subsidiaries, engages in the loan mortgage insurance business in Australia.
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