Genworth Financial (GNW 1.96%) will release its quarterly report on Tuesday, and investors are expecting earnings at the insurance company to fall slightly from year-ago levels. Yet even as the insurer has seen its mortgage-insurance division boost its results in the same way that Radian Group (RDN 1.38%) and MGIC Investment (MTG 0.83%) have come back from the brink of failure, Genworth still needs to handle AIG (AIG 0.88%) and other big competitors that have the capacity to play a big role in all of the markets Genworth aims to serve.

Genworth's strategy in recent years closely mimics AIG's, in that both companies have sought to get out of money-losing or less profitable businesses while seeking out those insurance lines that have the most profit potential going forward. In Genworth's case, the mortgage insurance industry has rebounded sharply thanks to rising home prices. But as interest rates rose, some worry that the housing market's best days are ending. Let's take an early look at what's been happening with Genworth Financial over the past quarter and what we're likely to see in its report.

Source: Flickr, courtesy Andrew Bain.

Stats on Genworth Financial

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.38 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Genworth earnings finally impress investors this quarter?
Analysts have gotten just a bit more optimistic about Genworth earnings in recent months, adding a penny per share to their fourth-quarter estimates. But the stock has failed to make any progress, falling 2% since late October.

Genworth's third-quarter results showed the extent to which investors have built in high expectations for the insurance company's profits. Net income more than tripled from year-ago levels, with strength coming both from the company's global mortgage-insurance unit as well as from its life-insurance division. Yet with total revenue down 6%, the stock actually fell after its earnings report, as investors who had bid up shares throughout much of 2013 had wanted to see even more growth.

Investors face an interesting conundrum with Genworth right now. Even though the stock has performed so strongly over the past year, it still trades at just about half of its book value. That discount reflects the ongoing turnaround that Genworth is going through, and given that AIG also trades at a substantial book-value discount, investors' concerns aren't limited just to Genworth in particular.

Yet Genworth knows it could take a lot longer for it to recover fully. In terms of long-term returns on equity, the company has said that it's only in the early stages of realizing all of its future potential. Moreover, Genworth hasn't yet reinstated its buyback, as it and its peers Radian, MGIC, and AIG all seek to build up their capital reserves to more stable levels before rewarding patient shareholders with payouts.

Still, Genworth is working hard to introduce attractive new products. Last month, Genworth introduced an index universal life insurance product that offers a benefit-rider for long-term care services. By offering innovative protection in various forms, Genworth hopes to gain a competitive advantage over AIG while also broadening its diversification to give it exposure to more than just the mortgage-insurance area that MGIC and Radian have seen recover so well.

In the Genworth earnings report, watch to see whether the company can finally do better than investors think it will. After a couple of less-than-perfect earnings reports, more solid growth could finally get Genworth moving forward more forcefully in 2014.

Click here to add Genworth Financial to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.