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Genworth MI Canada Inc. (TSX:MIC), the country’s largest private residential mortgage insurer through its Genworth Financial Mortgage Insurance Company Canada subsidiary, released its fourth-quarter earnings results after the market closed on Tuesday, and its stock responded by rallying 3.21% in Wednesday’s trading session. Let’s break down the quarterly results and the fundamentals of its stock to determine if the rally could continue, and if we should consider initiating long-term positions right now.
Breaking down its Q4 performance
Here’s a quick breakdown of eight of the most notable financial statistics from Genworth’s three-month period ended December 31, 2017, compared with the same period in 2016:
| Metric | Q4 2017 | Q4 2016 | Change |
| Transactional premiums written | $157 million | $149 million | 5.4% |
| Premiums earned | $171 million | $164 million | 4.3% |
| Net income | $132 million | $140 million | (5.7%) |
| Fully diluted earnings per common share (EPS) | $1.45 | $1.52 | (4.6%) |
| Net operating income | $121 million | $105 million | 17.5% |
| Fully diluted operating EPS | $1.33 | $1.14 | 16.7% |
| Fully diluted book value per common share, excluding certain items | $42.29 | $38.28 | 10.5% |
| Total assets | $6,924 million | $6,612 million | 4.7% |
Should you buy in to the rally?
It was a good quarter overall for Genworth, and it capped off a solid year for the company, in which its fully diluted operating EPS increased 20.3% to $5.09 and its diluted net EPS increased 26.9% to $5.76 compared with 2016. With these strong results in mind, I think the market responded correctly by sending its stock higher.
Even after the +3% pop, I think Genworth’s stock represents an intriguing long-term investment opportunity, because it trades at very attractive valuations, including just 7.4 times fiscal 2017’s EPS of $5.76 and a mere 1.01 times its book value of $42.29 per share, and because it has a high and safe 4.4% dividend yield with a track record of dividend growth.
With all of the information provided above in mind, I think Foolish investors should strongly consider initiating long-term positions in Genworth MI Canada today with the intention of adding to those positions on any weakness in the near future.
