Genworth Financial (NYSE:GNW) reported first-quarter earnings that matched expectations on the top line and beat on the bottom line. Adjusted earnings of $0.25 per share were in-line with expectations, while revenue came in slightly ahead of the $2.11 billion analysts were calling for.
The top- and bottom-line numbers rarely give a good picture of how a company really is doing, so here's a couple of highlights from Genworth's first quarter that can help explain why investors seem to be happy:
- U.S. mortgage insurance income increased 52% year over year. This is a very positive development, as mortgage insurance is more profitable for Genworth than its long-term care insurance business.
- Not only that, but all three of Genworth's mortgage-insurance markets produced positive results. Between the U.S., Canada, and Australia, Genworth's mortgage-insurance income was $179 million compared with a $32 million loss from long-term care insurance.
Perhaps most significantly is that Genworth continues to try to complete its sale to China Oceanwide Holdings Group, which has been delayed several times and was originally announced in October 2016.
The company previously announced that it has agreed to extend the deadline for the merger until July 1, 2018, and in the earnings report, Genworth CEO Tom McInerney expressed optimism that the deal would indeed get done, saying that management is "encouraged by the meaningful progress we have made toward achieving the necessary regulatory approvals."
To be clear, the acquisition price of $5.43 per share still represents 74% upside over the current stock price, so it's fair to say that the market isn't very convinced that the deal will get done. However, if it does go through, it would be a major windfall for shareholders, so any indication that the chances are improving could drive the stock higher.