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Will Low Rates Drag Prudential Financial (PRU) Q2 Earnings?

Zacks Equity Research

Prudential Financial Inc. (PRU) is scheduled to report second-quarter 2014 results on Aug 6.

In the last quarter, this life insurer delivered a 5.7% positive earnings surprise. The average beat for the trailing four quarters is 15.1%

Let's see what factors might have influenced the earnings report this time around.

Factors Likely to Influence Q2 Results

A soft interest rate environment rate will keep investment income under pressure. Reinvestment yields primarily for investments in fixed maturity securities and commercial mortgage loans will remain low.

In addition, limited wage inflation, unemployment and intense competition are expected to weigh on U.S. Group insurance results.

However, Prudential Financial is will likely witness higher demand for retirement benefits products due to an aging American population with baby boomers entering retirement. Its increased focus on Asset Management, Annuities and International business would also drive results.

Earnings Whispers

Our proven model does not conclusively show that Prudential Financial is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. However, that is not the case here as you will see below.

Zacks ESP:  Prudential Financial’s Most Accurate estimate is pegged at $2.34 per share, which is below the Zacks Consensus Estimate of $2.35. The Earnings ESP is thus -0.43%.

Zacks Rank: Prudential Financial has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of -0.43% makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

National General Holdings Corp. (NGHC) has an Earnings ESP of +8.00% and Zacks Rank #2 (Buy).

Qiwiplc (QIWI) has an Earnings ESP of +4.76% and a Zacks Rank #2.

Voya Financial, Inc. (VOYA) has an Earnings ESP of +2.86% and a Zacks Rank #3.

Read the Full Research Report on PRU
Read the Full Research Report on QIWI
Read the Full Research Report on NGHC
Read the Full Research Report on VOYA

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