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Prudential (PRU) Q4 Earnings Surpass Estimates, Fall Y/Y
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Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2019 operating net income of $2.33 per share beat the Zacks Consensus Estimate by 15.9% on the back of Prudential Global Investment Management (PGIM), U.S. Individual Solutions and U.S. Workplace Solutions segments. However, the bottom line declined 4.5% year over year.
Behind the Headlines
Total revenues of $17.4 billion were down 1.9% year over year due to lower asset management fees, commissions and other income. But the top line beat the Zacks Consensus Estimate by 18.5%.
Total benefits and expenses of $16.2 billion dipped 1.2% year over year in the quarter. This decrease in expenses was mainly attributable to lower insurance and annuity benefits.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
PGIM reported adjusted operating income of $288 million, up 18.5% year over year. This upside was owing to higher asset management fees, backed by an increase in average assets under management, and a rise in other related revenues, partly offset by elevated expenses.
PGIM assets under management were $1.3 trillion (a record high) at the end of the reported quarter, up 13% year over year.
U.S. Workplace Solutions’ adjusted operating income was $342 million, up 37.3% from the year-ago quarter on higher contribution from Retirement segment.
U.S. Individual Solutions reported adjusted operating income of $508 million, up 21.2% from the prior-year quarter, riding on growth in earnings from Individual Life and Individual Annuity business.
International Insurance delivered adjusted operating income of $797 million, up 8.3% from the year-earlier period, banking on stronger net investment spread results, business expansion and an unfavorable effect from changes in market conditions on estimates of profitability in the year-ago quarter.
Corporate and Other Operations incurred adjusted operating loss of $738 million, wider than $329 million loss a year ago. The loss deterioration reflects more expenses borne by the company pertaining to its Voluntary Separation Program.
Share Repurchase and Dividend Update
In the quarter under review, the company returned capital worth $906 million to its shareholders.
It also declared a quarterly dividend of $1.10 per share, payable Mar 12, 2020 to its shareholders of record as of Feb 18, 2020.
Financial Update
Cash and cash equivalents of $16.3 billion at the quarter end were up 6.3% year over year.
Debt balance totaled $20.6 billion as of Dec 31, 2019, up 3.8% from the level as of 2018 end.
As of Dec 31, 2019, Prudential Financial’s assets under management ascended 12.6% year over year to $1.5 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $101.04 as of Dec 31, 2019, up 5.2% year over year.
Operating return on average equity was 9.4% in the fourth quarter, contracting 90 basis points year over year.
Full Update
Operating net income for the year summed $11.69 per share, flat with the 2018-level. Revenues for the year totaled $58.1 billion, flat year over year.
Among other players from the insurance industry having already reported fourth-quarter earnings, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat estimates while that of Principal Financial (PFG - Free Report) met the mark.
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Prudential (PRU) Q4 Earnings Surpass Estimates, Fall Y/Y
Prudential Financial, Inc.’s (PRU - Free Report) fourth-quarter 2019 operating net income of $2.33 per share beat the Zacks Consensus Estimate by 15.9% on the back of Prudential Global Investment Management (PGIM), U.S. Individual Solutions and U.S. Workplace Solutions segments. However, the bottom line declined 4.5% year over year.
Behind the Headlines
Total revenues of $17.4 billion were down 1.9% year over year due to lower asset management fees, commissions and other income. But the top line beat the Zacks Consensus Estimate by 18.5%.
Total benefits and expenses of $16.2 billion dipped 1.2% year over year in the quarter. This decrease in expenses was mainly attributable to lower insurance and annuity benefits.
Prudential Financial, Inc. Price, Consensus and EPS Surprise
Prudential Financial, Inc. price-consensus-eps-surprise-chart | Prudential Financial, Inc. Quote
Quarterly Segment Update
PGIM reported adjusted operating income of $288 million, up 18.5% year over year. This upside was owing to higher asset management fees, backed by an increase in average assets under management, and a rise in other related revenues, partly offset by elevated expenses.
PGIM assets under management were $1.3 trillion (a record high) at the end of the reported quarter, up 13% year over year.
U.S. Workplace Solutions’ adjusted operating income was $342 million, up 37.3% from the year-ago quarter on higher contribution from Retirement segment.
U.S. Individual Solutions reported adjusted operating income of $508 million, up 21.2% from the prior-year quarter, riding on growth in earnings from Individual Life and Individual Annuity business.
International Insurance delivered adjusted operating income of $797 million, up 8.3% from the year-earlier period, banking on stronger net investment spread results, business expansion and an unfavorable effect from changes in market conditions on estimates of profitability in the year-ago quarter.
Corporate and Other Operations incurred adjusted operating loss of $738 million, wider than $329 million loss a year ago. The loss deterioration reflects more expenses borne by the company pertaining to its Voluntary Separation Program.
Share Repurchase and Dividend Update
In the quarter under review, the company returned capital worth $906 million to its shareholders.
It also declared a quarterly dividend of $1.10 per share, payable Mar 12, 2020 to its shareholders of record as of Feb 18, 2020.
Financial Update
Cash and cash equivalents of $16.3 billion at the quarter end were up 6.3% year over year.
Debt balance totaled $20.6 billion as of Dec 31, 2019, up 3.8% from the level as of 2018 end.
As of Dec 31, 2019, Prudential Financial’s assets under management ascended 12.6% year over year to $1.5 trillion.
Adjusted book value per common share, a measure of the company’s net worth, came in at $101.04 as of Dec 31, 2019, up 5.2% year over year.
Operating return on average equity was 9.4% in the fourth quarter, contracting 90 basis points year over year.
Full Update
Operating net income for the year summed $11.69 per share, flat with the 2018-level. Revenues for the year totaled $58.1 billion, flat year over year.
Zacks Rank
Prudential Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry having already reported fourth-quarter earnings, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat estimates while that of Principal Financial (PFG - Free Report) met the mark.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>