On Dec 28, Zacks Investment Research upgraded Prudential Financial, Inc. (PRU) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Prudential has witnessed rising earnings estimates on the back of solid third-quarter 2013 results. The company has also raised its dividend to return more value to its shareholders. Moreover, this multi-line insurer delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 18.5%. The long-term expected earnings growth rate for this stock is 14.2%.
In the last reported quarter, Prudential’s non-GAAP earnings per share came in at $2.94, significantly surpassing the Zacks Consensus Estimate by 40% and the year-ago earnings by 85%. The earnings outperformance came on the back of strong contribution from each of the company’s operating segments, headed by the Retirement Solutions and Investment Management segments.
With respect to share repurchase, Prudential spent $250 million to buy back 3.2 million shares. Following a strong third-quarter 2013 earnings performance, the board of directors of Prudential approved a 32.5% increase in its quarterly dividend to 53 cents per share. Its dividend currently yields 2.31%, better than the industry average of 1.36%.
The Zacks Consensus Estimate for 2013 increased 10.1% to $9.70 per share as all the estimates were revised higher over the last 60 days. The estimate translates to a year-over-year increase of 54.7%. For 2014 as well, most of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 1.7% to $9.22 per share.
Other Stocks to Consider
Other multi-line insurers worth considering include CNO Financial Group, Inc. (CNO), Kemper Corporation (KMPR) and Prudential plc (PUK). All these stocks carry the same Zacks Rank as Prudential Financial.