ASX:GMA

Stock Analysis Report

Genworth Mortgage Insurance Australia

Executive Summary

Genworth Mortgage Insurance Australia Limited, through its subsidiaries, engages in the loan mortgage insurance business in Australia.

Rewards

Trading at 16.1% below its fair value

Revenue is forecast to grow 7.9% per year

Earnings grew by 41.6% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -17.7% per year for the next 3 years

Dividend of 16.56% is not well covered by earnings



Snowflake Analysis

Good value with proven track record.


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Share Price & News

How has Genworth Mortgage Insurance Australia's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GMA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.0%

GMA

0.8%

AU Mortgage

2.6%

AU Market


1 Year Return

69.2%

GMA

43.6%

AU Mortgage

19.8%

AU Market

Return vs Industry: GMA exceeded the Australian Mortgage industry which returned 48% over the past year.

Return vs Market: GMA exceeded the Australian Market which returned 19.4% over the past year.


Shareholder returns

GMAIndustryMarket
7 Day-1.0%0.8%2.6%
30 Day1.6%2.7%4.0%
90 Day3.0%2.1%5.7%
1 Year104.8%69.2%63.0%43.6%25.2%19.8%
3 Year70.9%17.3%44.7%8.6%40.7%21.9%
5 Year121.2%-4.6%54.6%-11.3%62.0%25.5%

Price Volatility Vs. Market

How volatile is Genworth Mortgage Insurance Australia's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Genworth Mortgage Insurance Australia undervalued compared to its fair value and its price relative to the market?

17.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GMA (A$3.87) is trading below our estimate of fair value (A$4.61)

Significantly Below Fair Value: GMA is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: GMA is good value based on its PE Ratio (12.5x) compared to the Mortgage industry average (13.7x).

PE vs Market: GMA is good value based on its PE Ratio (12.5x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: GMA's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: GMA is good value based on its PB Ratio (1x) compared to the AU Mortgage industry average (1x).


Next Steps

Future Growth

How is Genworth Mortgage Insurance Australia forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

-17.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GMA's earnings are forecast to decline over the next 3 years (-17.7% per year).

Earnings vs Market: GMA's earnings are forecast to decline over the next 3 years (-17.7% per year).

High Growth Earnings: GMA's earnings are forecast to decline over the next 3 years.

Revenue vs Market: GMA's revenue (7.9% per year) is forecast to grow faster than the Australian market (3.8% per year).

High Growth Revenue: GMA's revenue (7.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GMA's Return on Equity is forecast to be low in 3 years time (5.5%).


Next Steps

Past Performance

How has Genworth Mortgage Insurance Australia performed over the past 5 years?

-23.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GMA has high quality earnings.

Growing Profit Margin: GMA's current net profit margins (28.3%) are higher than last year (24%).


Past Earnings Growth Analysis

Earnings Trend: GMA's earnings have declined by -23.3% per year over the past 5 years.

Accelerating Growth: GMA's earnings growth over the past year (41.6%) exceeds its 5-year average (-23.3% per year).

Earnings vs Industry: GMA earnings growth over the past year (41.6%) exceeded the Mortgage industry 17.4%.


Return on Equity

High ROE: GMA's Return on Equity (7.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Genworth Mortgage Insurance Australia's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: GMA has a low level of unsold assets or inventory.

Debt Coverage by Assets: GMA's debt is not covered by short term assets (assets are 0.4x debt).


Financial Institutions Analysis

Asset Level: GMA's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if GMA has a sufficient allowance for bad loans.

Low Risk Liabilities: GMA reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if GMA has an acceptable proportion of non-loan assets held.

Low Risk Deposits: GMA has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if GMA has an appropriate level of bad loans.


Next Steps

Dividend

What is Genworth Mortgage Insurance Australia's current dividend yield, its reliability and sustainability?

16.91%

Current Dividend Yield


Dividend Yield vs Market

company16.9%marketbottom25%2.3%markettop25%5.4%industryaverage2.6%forecastin3Years6.1%

Current dividend yield vs market & industry

Notable Dividend: GMA's dividend (16.56%) is higher than the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: GMA's dividend (16.56%) is in the top 25% of dividend payers in the Australian market (5.47%)


Stability and Growth of Payments

Stable Dividend: GMA has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: GMA's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (58.3%), GMA's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GMA's dividends in 3 years are not forecast to be well covered by earnings (91.9% payout ratio).


Next Steps

Management

What is the CEO of Genworth Mortgage Insurance Australia's salary, the management and board of directors tenure and is there insider trading?

2.9yrs

Average management tenure


CEO

Duncan West 0

0yrs

Tenure

AU$54,333

Compensation

Mr. Duncan G. West has been an Independent Non-Executive Director of Challenger Limited and Challenger Life Company Limited since September 10, 2018. He has been Director of Genworth Mortgage Insurance Aus ...


Management Age and Tenure

2.9yrs

Average Tenure

Experienced Management: GMA's management team is considered experienced (2.9 years average tenure).


Board Age and Tenure

3.5yrs

Average Tenure

57yo

Average Age

Experienced Board: GMA's board of directors are considered experienced (3.5 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$6,97601 Sep 19
Duncan West
EntityIndividual
Role
Chief Executive Officer
Acting CEO & Director
Shares2,318
Max PriceAU$3.01
BuyAU$52,00028 Feb 19
Christine Patton
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares20,000
Max PriceAU$2.60
BuyAU$10,00025 Feb 19
David Foster
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares3,937
Max PriceAU$2.54

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Prue Milne

    General Counsel & Company Secretary

    • Tenure: 3.3yrs
  • Helen Karlis

    Head of Corporate Affairs & Investor Relations

    • Andy Cormack

      Chief Risk Officer

      • Tenure: 4.3yrs
      • Compensation: AU$691.86k
    • Brady Weissel

      Assistant Company Secretary

      • Tenure: 3.8yrs
    • Kate Svoboda

      Chief Human Resources Officer

      • Tenure: 3.3yrs
    • Steven Degetto

      Chief Commercial Officer & Chair of Diversity and Inclusion Council

      • Tenure: 2.5yrs
      • Compensation: AU$677.32k
    • Richard Socratous

      Head of Strategic Partnerships

      • Tenure: 2.3yrs
    • Brad Dean

      Head of Strategy & Innovation

      • Tenure: 1.8yrs
    • Duncan West

      Acting CEO & Director

      • Compensation: AU$54.33k
    • Michael Bencsik

      Chief Financial Officer

      • Tenure: 0.9yrs

    Board Members

    • Ian MacDonald (65yo)

      Independent Chairman of the Board

      • Tenure: 3.4yrs
      • Compensation: AU$265.00k
    • Christine Patton

      Non-Executive Director

      • Tenure: 1.3yrs
      • Compensation: AU$46.33k
    • Edna Tollifson (64yo)

      Independent Director

      • Tenure: 7.9yrs
      • Compensation: AU$175.00k
    • David Foster (50yo)

      Independent Director

      • Tenure: 3.7yrs
      • Compensation: AU$175.00k
    • Stuart Take

      Director

      • Tenure: 7.9yrs
    • Jerome Upton (55yo)

      Director

      • Tenure: 7.9yrs
    • Gai McGrath (57yo)

      Independent Non-Executive Director

      • Tenure: 3.4yrs
      • Compensation: AU$175.00k
    • Duncan West

      Acting CEO & Director

      • Compensation: AU$54.33k

    Company Information

    Genworth Mortgage Insurance Australia Limited's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Genworth Mortgage Insurance Australia Limited
    • Ticker: GMA
    • Exchange: ASX
    • Founded: 1965
    • Industry: Thrifts and Mortgage Finance
    • Sector: Banks
    • Market Cap: AU$1.572b
    • Shares outstanding: 412.51m
    • Website: https://www.genworth.com.au

    Number of Employees


    Location

    • Genworth Mortgage Insurance Australia Limited
    • 101 Miller Street
    • Level 26
    • North Sydney
    • New South Wales
    • 2060
    • Australia

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    GMAASX (Australian Securities Exchange)YesOrdinary SharesAUAUDMay 2014
    GMACHIA (Chi-X Australia)YesOrdinary SharesAUAUDMay 2014
    0GIDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2014

    Biography

    Genworth Mortgage Insurance Australia Limited, through its subsidiaries, engages in the loan mortgage insurance business in Australia. The company facilitates residential mortgage lending by transferring risk from lenders to lenders mortgage insurance (LMI) providers, primarily for high loan-to-value ratio residential mortgage loans. It offers LMI through flow and portfolio basis. The company was founded in 1965 and is headquartered in North Sydney, Australia. Genworth Mortgage Insurance Australia Limited is a subsidiary of Genworth Australian General Partnership. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/21 10:42
    End of Day Share Price2020/01/21 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.