GNW

Genworth is a tale of two stories sitting at an uncomfortable middle. The headline valuation looks compelling: 0.5x P/S, a $3.60B market cap against $8.75B of book equity (roughly 0.41x P/B implied), and management is shrinking the share count aggressively — shares outstanding fell 7.5% YoY and the company spent $247M on buybacks in FY2025 (up 30.7%). Retained earnings are climbing (+15.2% to $1.68B), and operating cash flow rebounded sharply to $327M (+271.6%). For a sub-$10 stock trading well below book, that buyback cadence is the most tangible bull case.

But the fundamentals beneath the buyback are weakening, not strengthening. Net income fell 25.4% to $223M, diluted EPS dropped 20.6% to $0.54, and ROE is just 2.5% — well below cost of capital for any insurer. The 17.2x P/E on depressed earnings is not cheap on an earnings basis, only on a sales/book basis. The MD&A confirms the pressure point: Enact's loss ratio nearly tripled from 4% to 11% in 2025, with reserve releases shrinking from $252M to $200M — meaning the favorable reserve tailwind that has flattered prior-year results is fading. New delinquencies rose to 50,481 (from 48,537), and management explicitly flags that loss severity could be hit by extended forbearance timelines and higher loan amounts on recent delinquencies.