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Here's Why You Should Hold Prudential (PRU) Stock For Now
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Prudential Financial, Inc.’s (PRU - Free Report) remains well-poised for growth, driven by higher net investment spread results, higher premiums, strategic acquisitions, favorable underwriting and effective capital deployment.
Earnings Surprise History
Prudential Financial has a decent surprise history, beating earnings estimates in six of the last seven reported quarters.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has lost 17.7% compared with the industry’s decline of 20.4%.
Image Source: Zacks Investment Research
Return on Equity
PRU’s return on equity for the trailing 12 months is 9.2%, up 30 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Prudential Financial’s international businesses, consisting of Life Planner and Gibraltar Life & Other, are likely to gain from continued business growth, lower expenses and higher net investment spread results. Higher premiums, policy charges and fee income attributable to the growth of business drive growth in Life Planner operations.
U.S. businesses should continue to gain from a higher net investment spread, which includes benefits from variable investment income and rising interest rates. Favorable underwriting, owing to declining COVID-related mortality experience and lower expenses, on the back of cost savings initiatives should also add to the upside.
PRU continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In March 2022, it completed the acquisition of an initial minority stake in Alex Forbes in Africa. In June 2022, it established a partnership with Mercado Libre. This will enable it to deliver life insurance and accident and health products, which are customized for the platform's mass market customer base.
Prudential Financial expects to achieve the full $750 million cost savings target in 2022, which is one year ahead of the target date. The company recorded $175 million in cost savings in the second quarter for a total of $725 million of run-rate savings so far since 2019.
Prudential Financial’s solid financial position provides it with the flexibility to execute its transformation and invest in the long-term growth of businesses. Prudential has solid liquidity that includes a $4 billion credit facility and access to $3 billion of funding from a contingent capital facility.
The multi-line insurer expects to return $11 billion to shareholders via share buyback through the end of 2023. Its capital deployment is supported by its sturdy balance sheet strength that includes highly liquid assets, additional proceeds from divestitures and a capital position that continues to support an AA financial strength rating. Its current dividend yield of 5.5% is better than the industry average of 2.6%. This makes the stock an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for Prudential Financial’s 2023 earnings per share is pegged at $12.05, indicating an increase of 20.1% from the year-ago reported figure. The expected long-term earnings growth rate is 9%.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Radian Group Inc. (RDN - Free Report) and Old Republic International Corporation (ORI - Free Report) . While James River Group and Radian Group 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.
The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 137% and 15.3% year-over-year growth, respectively.
The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 2.6% and 4.6% north, respectively, in the past 60 days. In the past year, the insurer has declined 32.7%.
Radian Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 29.51%.
The Zacks Consensus Estimate for RDN’s 2022 and 2023 earnings has moved 16.1% and 9.7% north, respectively, in the past 60 days. In the past year, the insurer has declined 17.1%.
Old Republic International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 15.1%.
The Zacks Consensus Estimate for ORI’s 2022 earnings has moved 4.2% north in the past 60 days. In the past year, the insurer has declined 11.1%.
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Here's Why You Should Hold Prudential (PRU) Stock For Now
Prudential Financial, Inc.’s (PRU - Free Report) remains well-poised for growth, driven by higher net investment spread results, higher premiums, strategic acquisitions, favorable underwriting and effective capital deployment.
Earnings Surprise History
Prudential Financial has a decent surprise history, beating earnings estimates in six of the last seven reported quarters.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has lost 17.7% compared with the industry’s decline of 20.4%.
Image Source: Zacks Investment Research
Return on Equity
PRU’s return on equity for the trailing 12 months is 9.2%, up 30 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Prudential Financial’s international businesses, consisting of Life Planner and Gibraltar Life & Other, are likely to gain from continued business growth, lower expenses and higher net investment spread results. Higher premiums, policy charges and fee income attributable to the growth of business drive growth in Life Planner operations.
U.S. businesses should continue to gain from a higher net investment spread, which includes benefits from variable investment income and rising interest rates.
Favorable underwriting, owing to declining COVID-related mortality experience and lower expenses, on the back of cost savings initiatives should also add to the upside.
PRU continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In March 2022, it completed the acquisition of an initial minority stake in Alex Forbes in Africa. In June 2022, it established a partnership with Mercado Libre. This will enable it to deliver life insurance and accident and health products, which are customized for the platform's mass market customer base.
Prudential Financial expects to achieve the full $750 million cost savings target in 2022, which is one year ahead of the target date. The company recorded $175 million in cost savings in the second quarter for a total of $725 million of run-rate savings so far since 2019.
Prudential Financial’s solid financial position provides it with the flexibility to execute its transformation and invest in the long-term growth of businesses. Prudential has solid liquidity that includes a $4 billion credit facility and access to $3 billion of funding from a contingent capital facility.
The multi-line insurer expects to return $11 billion to shareholders via share buyback through the end of 2023. Its capital deployment is supported by its sturdy balance sheet strength that includes highly liquid assets, additional proceeds from divestitures and a capital position that continues to support an AA financial strength rating. Its current dividend yield of 5.5% is better than the industry average of 2.6%. This makes the stock an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for Prudential Financial’s 2023 earnings per share is pegged at $12.05, indicating an increase of 20.1% from the year-ago reported figure. The expected long-term earnings growth rate is 9%.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Radian Group Inc. (RDN - Free Report) and Old Republic International Corporation (ORI - Free Report) . While James River Group and Radian Group 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.
The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 137% and 15.3% year-over-year growth, respectively.
The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 2.6% and 4.6% north, respectively, in the past 60 days. In the past year, the insurer has declined 32.7%.
Radian Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 29.51%.
The Zacks Consensus Estimate for RDN’s 2022 and 2023 earnings has moved 16.1% and 9.7% north, respectively, in the past 60 days. In the past year, the insurer has declined 17.1%.
Old Republic International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 15.1%.
The Zacks Consensus Estimate for ORI’s 2022 earnings has moved 4.2% north in the past 60 days. In the past year, the insurer has declined 11.1%.