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What's in Store for Prudential (PRU) This Earnings Season?

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Prudential Financial, Inc. (PRU - Free Report) is slated to report second-quarter 2021 results on Aug 3, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 24.36%.

Factors to Consider

Higher assets under management, higher net investment spread, and lower expenses are likely to have aided Prudential’s second-quarter performance.

Business growth, more favorable underwriting, and higher earnings from Chilean pension joint venture are likely to have contributed to the performance of the International Insurance segment.

Lower level of sales is likely to have affected the Life Planner and Gibraltar Life operations in the second quarter.

The retirement business is likely to have benefited from higher net investment spread and a higher contribution from reserve experience resulting from COVID-19 related mortality gains.

Lower underwriting in group life and group disability businesses as well as less favorable impact from claim experience on long-term disability contracts are likely to have impacted the Group Insurance business in the to-be-reported quarter.

PGIM is likely to have benefited from higher asset management fees and other related revenues, higher commercial mortgage origination revenue, increase in service, distribution and other revenues.

Assets under management are likely to have benefited from market appreciation and strong investment performance.

The company estimates net investment income to be reduced by $10 million. It will reflect the difference between new money rates and disposition yields of investment portfolio.

The company estimates expenses and other items to be approximately $500 million lower in the second quarter.

Individual Annuities is likely to have benefited from higher net investment spread results and higher fee income, net of distribution expenses and other associated costs.

Individual life sales are likely to have increased in the to-be-reported quarter as higher variable life sales offset lower sales of other policies.

Prudential estimates second-quarter earnings per share to be $2.97.

The Zacks Consensus Estimate for earnings per share is pegged at $3.04, indicating 64.3% increase from the year-ago period reported figure. The Zacks Consensus Estimate for revenues is pegged at $13.8 billion, indicating a increase of about 5.7% from the year-ago reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Prudential this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below.

Earnings ESP: Prudential has an Earnings ESP of -1.24%. This is because the Most Accurate Estimate of $3.00 is pegged lower than the Zacks Consensus Estimate of $3.04. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Prudential currently carries a Zacks Rank of 3.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +7.56% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assurant, Inc. (AIZ - Free Report) has an Earnings ESP of +2.01% and a Zacks Rank #3.

Lemonade, Inc. (LMND - Free Report) has an Earnings ESP of +10.48% and a Zacks Rank of 3.

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