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Should You Retain Prudential Financial (PRU) Stock Now?

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Prudential Financial, Inc. (PRU - Free Report) is well-poised to gain from business growth, higher net investment spread, lower expenses and a robust capital position.

Growth Projections

The Zacks Consensus Estimate for Prudential Financial’s 2023 earnings per share is pegged at $13.33, indicating an increase of 10.1% from the year-ago reported figure.

Earnings Surprise History

The multi-line insurer has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average being 38.03%.

Zacks Rank & Price Performance

Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, the PRU stock has rallied 30.4% against the industry’s decline of 8.8%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Business Tailwinds

The multi-line insurer’s international businesses remain well-poised to gain from 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 intends to shift the business mix toward higher-growth and less interest rate-sensitive products and businesses in an effort to transform capabilities and cost structure, and enhance addressable markets.

The insurer remains on track to achieve $750 million in savings by the end of 2023. So far, PRU has achieved $635 million in run-rate cost savings, which exceeded the $500-million target for 2021.

Prudential Financial has a strong international presence that gives it more organic growth opportunities than its peers. The insurer, thus, remains upbeat about expanding its international footprint, with a focus on directing earnings mix to higher-growth markets.

Prudential Financial and LeapFrog Investments Group, Ltd. jointly announced the purchase of a minority interest in Alexander Forbes Group Holdings Limited in March 2022. The buyout, upon its completion, will aid the insurer to penetrate high-growth financial services markets in Africa.

Capital Position

The multi-line insurer continues to maintain a solid capital position and adequate sources of funding. The capital position continues to support an AA financial strength rating. Prudential Financial’s other sources of funds include free cash flow from businesses and contingent capital facilities.

Solid Dividend History

Based on operational excellence, Prudential Financial’s dividend payments have witnessed a CAGR of 9.5% in the past nine years (2014-2022) and currently yield 4%, better than the industry average of 2.1%. This makes the stock an attractive pick for yield-seeking investors. PRU aims to return $11 billion of capital to shareholders between 2021 and 2023-end via share repurchases and dividends.

Stocks to Consider

Some better-ranked insurers are Horace Mann Educators Corporation (HMN - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Old Republic International Corporation (ORI - Free Report) . While Horace Mann Educators and Cincinnati Financial currently sport a Zacks Rank #1 (Strong Buy), Old Republic International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Horace Mann’s earnings surpassed estimates in each of the last four quarters, the average beat being 22.8%. In the past year, HMN has declined 4.1%.

The Zacks Consensus Estimate for Horace Mann’s 2022 and 2023 earnings has moved 8.3% and 11% north, respectively, in the past 60 days.

The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the insurer has rallied 29.2%.

The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.

Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 38.74%. In the past year, ORI has rallied 18.1%.

The Zacks Consensus Estimate for Old Republic International’s 2022 and 2023 earnings has moved 3.7% and 7.5% north, respectively, in the past 60 days.

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