Genworth Financial, Inc. (NYSE:GNW) stock flux has recently been causing stir among the investment community. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of GNW, the chart has some interesting things to say about where the stock might be headed in the future.
How has the stock performed recently?
Genworth Financial, Inc. (NYSE:GNW) in the last month has decreased -3.52%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -161%. After the latest session, which saw the stock close at a price of $3.84, GNW sits below its 52-week high. Genworth Financial, Inc. (NYSE:GNW) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that GNW may be headed in the future. To do this, analysts often study the speed and magnitude of a stock’s price movements with what are known as momentum indicators. The logic is that as a stock’s momentum slows, it may be nearing key support or resistance levels and possibly the end of a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for GNW is 55.62%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 67.96%, tells a similar story, and suggests that GNW currently trades in neutral territory.
What do the trading volumes reveal?
Price isn’t the only tool analysts use to forecast future performance. Volume patterns can also reveal some important insights. If, for instance, a stock’s volumes suddenly increase by a significant amount, it’s usually a sign that the level of conviction behind the trade is high. Investors may feel very strongly about the future direction of the stock in question. Genworth Financial, Inc. (GNW) average trading volume of 5,102,200 during the past month is 9.54% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
GNW is currently undervalued by -1.03% relative to the average 1-year price target of $3.88 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.00, which implies that analysts are generally neutral in their outlook for GNW over the next year.
How risky is the stock?
In order to put GNW’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
Genworth Financial, Inc. (NYSE:GNW) has a beta of 2.86, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. GNW therefore has a above average level of market risk. During the past couple of weeks, GNW average daily volatility was 68.42%, which is -26.46 percentage points higher than the average volatility over the past 100 days.