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Why Is Prudential (PRU) Down 5.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Prudential (PRU - Free Report) . Shares have lost about 5.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prudential due for a breakout? 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 drivers.
Prudential Q1 Earnings Beat, Revenues Lag Estimates
Prudential Financial's first-quarter 2022 operating net income of $3.17 per share beat the Zacks Consensus Estimate by 18.7%. The bottom line decreased 20.6% year over year.
Prudential Financial's results were driven by higher contributions from U.S. Businesses, partially offset by poor performance of Prudential Global Investment Management (PGIM) and International businesses.
Behind the Headlines
Total revenues of $13.6 billion were down 0.7% year over year due to lower policy charges and fee income, asset management fees, commissions and other income. The top line missed the Zacks Consensus Estimate by about 3.7%.
Total benefits and expenses of $12.1 billion were up 3.2% year over year for the quarter. This increase in expenses was mainly attributable to higher insurance and annuity benefits.
Quarterly Segment Update
PGIM reported adjusted operating income of $188 million, which decreased 71% year over year. This decrease reflects a $378 million gain from the sale of an asset management joint venture in Italy in the year-ago quarter. This decrease also reflects lower Other Related Revenues due to a decrease in seed and co-investment income and incentive fees, and higher expenses. It was partially offset by higher asset management fees.
U.S. Businesses’ adjusted operating income was $943 million, up 11.9% from the year-ago quarter. This increase reflects higher net investment spread results, more favorable underwriting results, and lower expenses. It was partially offset by lower net fee income.
Assurance IQ incurred adjusted operating loss of $37 million, narrower than a loss of $39 million in the year-ago quarter. This reflects a decrease in expenses. Revenues in the first quarter were reduced by a $15 million adjustment, reflecting updated persistency experience and assumptions.
International Businesses delivered adjusted operating income of $801 million, down 8% from the year-earlier period. This decrease reflects lower net investment spread results, less favorable underwriting results, and lower earnings from joint venture investments, partially offset by business growth.
Corporate and Other Operations incurred adjusted operating loss of $366 million, wider than $322 million loss a year ago. The higher loss reflects higher expenses and lower net investment income. It was partially offset by higher income from pension and other employee benefit plans and lower interest expense.
Share Repurchase Update
Prudential returned capital worth $837 million in the quarter, including $375 million of share repurchases and $462 million of dividends.
Prudential increased dividend by 4% in the first quarter, marking the 14th consecutive annual dividend increase.
Financial Update
Cash and cash equivalents of $14.1 billion at quarter-end increased 9.3% from the 2021-end level.
Debt balance totaled $20.2 billion as of Mar 31, 2022, up 4.6% from the 2021-end level.
As of Mar 31, 2022, Prudential’s assets under management decreased 2.6% year over year to $1.620 trillion.
Adjusted book value per common share — a measure of the company’s net worth — came in at $107.16 as of Mar 31, 2022, up 6.6% year over year.
Operating return on average equity was 11.8% for the first quarter, contracting 470 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.89% due to these changes.
VGM Scores
Currently, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Prudential (PRU) Down 5.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Prudential (PRU - Free Report) . Shares have lost about 5.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prudential due for a breakout? 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 drivers.
Prudential Q1 Earnings Beat, Revenues Lag Estimates
Prudential Financial's first-quarter 2022 operating net income of $3.17 per share beat the Zacks Consensus Estimate by 18.7%. The bottom line decreased 20.6% year over year.
Prudential Financial's results were driven by higher contributions from U.S. Businesses, partially offset by poor performance of Prudential Global Investment Management (PGIM) and International businesses.
Behind the Headlines
Total revenues of $13.6 billion were down 0.7% year over year due to lower policy charges and fee income, asset management fees, commissions and other income. The top line missed the Zacks Consensus Estimate by about 3.7%.
Total benefits and expenses of $12.1 billion were up 3.2% year over year for the quarter. This increase in expenses was mainly attributable to higher insurance and annuity benefits.
Quarterly Segment Update
PGIM reported adjusted operating income of $188 million, which decreased 71% year over year. This decrease reflects a $378 million gain from the sale of an asset management joint venture in Italy in the year-ago quarter. This decrease also reflects lower Other Related Revenues due to a decrease in seed and co-investment income and incentive fees, and higher expenses. It was partially offset by higher asset management fees.
U.S. Businesses’ adjusted operating income was $943 million, up 11.9% from the year-ago quarter. This increase reflects higher net investment spread results, more favorable underwriting results, and lower expenses. It was partially offset by lower net fee income.
Assurance IQ incurred adjusted operating loss of $37 million, narrower than a loss of $39 million in the year-ago quarter. This reflects a decrease in expenses. Revenues in the first quarter were reduced by a $15 million adjustment, reflecting updated persistency experience and assumptions.
International Businesses delivered adjusted operating income of $801 million, down 8% from the year-earlier period. This decrease reflects lower net investment spread results, less favorable underwriting results, and lower earnings from joint venture investments, partially offset by business growth.
Corporate and Other Operations incurred adjusted operating loss of $366 million, wider than $322 million loss a year ago. The higher loss reflects higher expenses and lower net investment income. It was partially offset by higher income from pension and other employee benefit plans and lower interest expense.
Share Repurchase Update
Prudential returned capital worth $837 million in the quarter, including $375 million of share repurchases and $462 million of dividends.
Prudential increased dividend by 4% in the first quarter, marking the 14th consecutive annual dividend increase.
Financial Update
Cash and cash equivalents of $14.1 billion at quarter-end increased 9.3% from the 2021-end level.
Debt balance totaled $20.2 billion as of Mar 31, 2022, up 4.6% from the 2021-end level.
As of Mar 31, 2022, Prudential’s assets under management decreased 2.6% year over year to $1.620 trillion.
Adjusted book value per common share — a measure of the company’s net worth — came in at $107.16 as of Mar 31, 2022, up 6.6% year over year.
Operating return on average equity was 11.8% for the first quarter, contracting 470 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.89% due to these changes.
VGM Scores
Currently, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.