Genworth Financial (Genworth Financial) Predictability Rank

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Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Genworth Financial Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Genworth Financial (Genworth Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Genworth Financial Inc (NYSE:GNW) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

6620 West Broad Street, Richmond, VA, USA, 23230

Website

https://www.genworth.com

Genworth Financial is a diversified insurance holding company that provides various mortgage and life insurance products. The company has three main operating business segments: Enact, U.S. Life Insurance, and Runoff. The company's product portfolio includes various financial products such as traditional life insurance, mortgage insurance, fixed annuities, and variable annuities. most of the revenue is generated by the company's U.S. life insurance segment that offers long-term care insurance, fixed annuity, and traditional life insurance products. The company earns most of its revenue in the United States.

Executives

Thomas J Mcinerney	director, officer: President and CEO; Director	6620 WEST BROAD STREET, RICHMOND VA 23230
Cristina E. Ahn	officer: VP and Controller	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Kelly A Saltzgaber	officer: EVP & Chief Investment Officer	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Rohit Gupta	officer: EVP?U.S. Mortgage Insurance	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Sheehan Daniel J Iv	officer: SVP - Chief Investment Officer	6620 WEST BROAD STREET, RICHMOND VA 23230
Andrea Lynn White	officer: EVP-GR & Chief of Staff	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Mark Blakeley Hodges	officer: EVP and CRO	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Elaine A Sarsynski	director	312 FARMINGTON AVE, FARMINGTON CT 06032
Restrepo Robert P Jr	director
Melissa Hagerman	officer: EVP and Chief HR Officer	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Gregory S. Karawan	officer: EVP and General Counsel	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Mills Howard D. Iii	director	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Jill R Goodman	director	433 WEST VAN BUREN STREET, CHICAGO IL 60607
Ramsey D. Smith	director	C/O GENWORTH FINANCIAL, INC., 6620 WEST BROAD STREET, RICHMOND VA 23230
Karen Elizabeth Dyson	director	21 RIVERSIDE DR., APT 601, COCOA FL 32922