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Will Prudential (PRU) Disappoint This Earnings Season?

HIG PRU WMC SRC

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Life insurer Prudential Financial, Inc. (PRU - Analyst Report) is set to report third-quarter 2013 results today after the market closes. Last quarter, it posted a 16.2% positive surprise. Let’s see how things are shaping up, prior to this announcement.

Growth Factors This Past Quarter

Prudential has a well diversified business profile with reach in different markets and a broad product portfolio.

Prudential is set to benefit from the aging American population. The company is witnessing a huge demand for retirement benefits products as baby boomers enter retirement.

Moreover, the acquisition of Individual Life Insurance business of The Hartford Financial Services Group Inc. (HIG - Analyst Report) at the end of 2012, has helped the company earn a place among the top five largest individual life insurance companies in the U.S. in terms of new recurring premium sales.

The company also has significant overseas business which is generating strong earnings.  

Also, Prudential’s Retirement segment is set to greatly benefit from the company’s penetration in the pension risk transfer business.  

Earnings Whispers?

Our proven model does not conclusively show that Prudential is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case with Prudential as you will see below.

Zacks ESP 0.0%: That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.10. The difference is 0.0%.

Zacks Rank: Prudential’s Zacks Rank #2 (Buy) increases the predictive power of ESP. This when combined with a 0.0% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Western Asset Mortgage Capital Corporation (WMC - Snapshot Report), earnings ESP of +12.4% and a Zacks Rank #3 (Hold).

Spirit Realty Capital, Inc. (SRC - Snapshot Report), earnings ESP of +137.5% and a Zacks Rank #3 (Hold).

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