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Prudential Financial (PRU) Gains From Solid Segmental Show

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Prudential Financial, Inc. (PRU - Free Report) has been gaining momentum, given the insurer's business growth, higher net investment spread, favorable underwriting results and higher asset management fees.

Growth Projections

The Zacks Consensus Estimate for Prudential Financial’s 2021 earnings per share is pegged at $14.14, indicating a year-over-year increase of 38.4%.

Estimate Revision

The Zacks Consensus Estimate for 2021 has moved 5.3% north in the past 60 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Prudential Financial has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 34.07%.

Zacks Rank & Price Performance

Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 31.8% compared with the industry’s increase of 1.4%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Business Tailwinds

The multi-line insurer’s international businesses are well poised for growth on the back of continued business growth, higher net investment spread, lower expenses, and higher earnings from joint venture investments as well as favorable underwriting results.

U.S. businesses should continue to benefit from higher net investment spread and higher fee income as well as favorable underwriting results, a complementary mix of longevity and mortality businesses.

Prudential Financial aims to shift its business mix and product portfolio to reduce market sensitivity, accelerate long-term growth and expand its addressable markets.

To meet this end, PRU agreed to sell its full-service retirement business in July 2021. In September 2021, it declared to sell a portion of its legacy in-force annuities block to limit the overall contribution of traditional variable annuities.

In October, 2021, Prudential Financial established Prudential Retirement Strategies in a bid to cater to the retirement needs of individual and institutional customers. Prudential Retirement Strategies, a U.S. business, is expected to bring together the Individual Annuities business and Retirement Institutional Investment products, which include pension risk transfer and international reinsurance, among others. This strategic move is likely to boost the Retirement business of Prudential.

PGIM division of Prudential Financial continues to gain from the sale of a 35% ownership stake in Pramerica SGR in the current year period, as well as an increase in asset management fees, lower expenses and higher other related revenues. PGIM had record-high asset management fees driven by record account values of over $1.5 trillion in the third quarter.

Riding on business growth, cost-savings program and market appreciation, underlying earnings are likely to increase in the long run.

Prudential Financial boasts a robust capital position and sufficient liquidity. Capital position continues to support a AA financial strength rating and its cash and liquid assets were more than three times annual fixed charges. Other sources of funds include free cash flow from businesses and other contingent capital facilities.

Key Players

Some better-ranked stocks in the insurance sector include Old Republic International (ORI - Free Report) , Prudential plc (PUK - Free Report) and Legal & General Group (LGGNY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Republic’s earnings surpassed estimates in each of the last four quarters, the average beat being 54.63%. The Zacks Consensus Estimate for Old Republic’s 2021 earnings implies 29.4% year-over-year growth.

Prudential’s expected long-term earnings growth rate is pegged at 9%. The Zacks Consensus Estimate for Prudential’s 2021 earnings has moved up 0.9% in the past 60 days.

The Zacks Consensus Estimate for Legal & General Group’s 2021 earnings implies 65.6% year-over-year growth. The Zacks Consensus Estimate for Legal & General Group’s 2021 and 2022 earnings has moved up 10.4% and 10.3% in the past 60 days.

ORI, PUK and LGGNY have gained 30.1%, 1.1% and 14.8%, respectively, in the past year.