We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Prudential (PRU) Up 2.6% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Prudential (PRU - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prudential due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Prudential Q3 Earnings Lag Estimates, Revenues Rise Y/Y
Prudential Financial's third-quarter 2022 operating net income of $2.13 per share missed the Zacks Consensus Estimate by 3.6%. The bottom line decreased 43.6% year over year.
Prudential Financial's results reflect higher expenses, poor performance of Prudential Global Investment Management (PGIM), U.S. Businesses and International businesses, offset by higher premiums.
Behind the Headlines
Total revenues of $21.6 billion increased 10% year over year on higher premiums. The top line beat the Zacks Consensus Estimate by 69.4%. The figure was higher than our estimate of $12.8 billion.
Total benefits and expenses of $20.6 billion were up 15.5% year over year for the quarter. The increase in expenses was mainly attributable to higher insurance and annuity benefits and interest expense. The figure was higher than our estimate of $11.6 billion.
Quarterly Segment Update
PGIM reported adjusted operating income of $219 million, decreased 33% year over year. This decrease reflects lower asset management fees, due to a reduction in assets under management.
U.S. Businesses’ adjusted operating income was $702 million, down 35.6% from the year-ago quarter. This decrease reflects lower net investment spread results, due to lower variable investment income, and lower net fee income. It was partially offset by favorable underwriting results.
Assurance IQ incurred adjusted operating loss of $44 million, narrower than a loss of $55 million in the year-ago quarter. This lower loss reflects lower expenses, partially offset by lower revenues, due to less case referral income.
International Businesses delivered adjusted operating income of $430 million, down 51.5% from the year-earlier period. This decrease reflects less favorable underwriting results and lower net investment spread results, due to lower variable investment income.
Corporate and other operations incurred adjusted operating loss of $325 million, narrower than a loss of $460 million a year ago. This lower loss reflects the absence of costs related to the early extinguishment of debt in the year-ago quarter, gains from the sales of certain home office properties, favorable foreign exchange rate impacts and higher income from pension and other employee benefit plans.
Share Repurchase Update
Prudential returned capital worth $829 million in the quarter, including $375 million of share repurchases and $454 million of dividends.
Dividends paid were $1.20 per share, representing a 5% yield on adjusted book value.
Financial Update
Cash and cash equivalents of $20.1 billion at quarter-end increased 28.8% year over year. The figure was higher than our estimate of $12.4 billion.
Debt balance totaled $20.7 billion as of Sep 30, 2022, up 6.8% from the 2021-end level.
As of Sep 30, 2022, Prudential’s assets under management decreased 21.8% year over year to $1.350 trillion.
Adjusted book value per common share — a measure of the company’s net worth — came in at $102.26 as of Sep 30, 2022, down 4.3% year over year.
Operating return on average equity was 8.3% for the third quarter, contracting 620 basis points year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Prudential has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Prudential (PRU) Up 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Prudential (PRU - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prudential due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Prudential Q3 Earnings Lag Estimates, Revenues Rise Y/Y
Prudential Financial's third-quarter 2022 operating net income of $2.13 per share missed the Zacks Consensus Estimate by 3.6%. The bottom line decreased 43.6% year over year.
Prudential Financial's results reflect higher expenses, poor performance of Prudential Global Investment Management (PGIM), U.S. Businesses and International businesses, offset by higher premiums.
Behind the Headlines
Total revenues of $21.6 billion increased 10% year over year on higher premiums. The top line beat the Zacks Consensus Estimate by 69.4%. The figure was higher than our estimate of $12.8 billion.
Total benefits and expenses of $20.6 billion were up 15.5% year over year for the quarter. The increase in expenses was mainly attributable to higher insurance and annuity benefits and interest expense. The figure was higher than our estimate of $11.6 billion.
Quarterly Segment Update
PGIM reported adjusted operating income of $219 million, decreased 33% year over year. This decrease reflects lower asset management fees, due to a reduction in assets under management.
U.S. Businesses’ adjusted operating income was $702 million, down 35.6% from the year-ago quarter. This decrease reflects lower net investment spread results, due to lower variable investment income, and lower net fee income. It was partially offset by favorable underwriting results.
Assurance IQ incurred adjusted operating loss of $44 million, narrower than a loss of $55 million in the year-ago quarter. This lower loss reflects lower expenses, partially offset by lower revenues, due to less case referral income.
International Businesses delivered adjusted operating income of $430 million, down 51.5% from the year-earlier period. This decrease reflects less favorable underwriting results and lower net investment spread results, due to lower variable investment income.
Corporate and other operations incurred adjusted operating loss of $325 million, narrower than a loss of $460 million a year ago. This lower loss reflects the absence of costs related to the early extinguishment of debt in the year-ago quarter, gains from the sales of certain home office properties, favorable foreign exchange rate impacts and higher income from pension and other employee benefit plans.
Share Repurchase Update
Prudential returned capital worth $829 million in the quarter, including $375 million of share repurchases and $454 million of dividends.
Dividends paid were $1.20 per share, representing a 5% yield on adjusted book value.
Financial Update
Cash and cash equivalents of $20.1 billion at quarter-end increased 28.8% year over year. The figure was higher than our estimate of $12.4 billion.
Debt balance totaled $20.7 billion as of Sep 30, 2022, up 6.8% from the 2021-end level.
As of Sep 30, 2022, Prudential’s assets under management decreased 21.8% year over year to $1.350 trillion.
Adjusted book value per common share — a measure of the company’s net worth — came in at $102.26 as of Sep 30, 2022, down 4.3% year over year.
Operating return on average equity was 8.3% for the third quarter, contracting 620 basis points year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Prudential has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.