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Prudential Financial (PRU) Q4 Earnings: What's in the Cards?

Zacks Equity Research

Prudential Financial, Inc. PRU is slated to report fourth-quarter 2018 results on Feb 6, after market close. In the last reported quarter, the company came up with a positive earnings surprise of 0.32%.

Factors to Consider

Prudential Financial is expected to benefit from new recurring premium sales, expanded product offerings and broader distribution capabilities.

International Insurance segment is likely to benefit from higher contributions from Life Planner plus Gibraltar Life and Other operations.

Prudential Retirement segment is expected to benefit from leadership in the pension risk transfer business.

Accelerated pace in rate hikes and broader invested asset balances should benefit investment results.

Revenues are likely to benefit from increase in premiums, investment income, policy charges as well as fee income. However, the Zacks Consensus Estimate for revenues is pegged at $14 billion, down 8% year over year.

However, higher policyholders’ benefits, amortization of deferred policy acquisition costs as well as general and administrative expenses may result in higher expenses. This, in turn, might restrict operating margin expansion.

Nonetheless, lower share count owing to buybacks and lower tax incidence are likely to provide additional boost to the bottom line. The Zacks Consensus Estimate is pegged at $2.88, up 7.1% year over year.

What Our Quantitative Model States

Our proven model does not show that Prudential Financial is likely to deliver a positive earnings surprise. This is because it does not have the right combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP.

Earnings ESP: Prudential Financial has an Earnings ESP of -1.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Prudential Financial, Inc. Price and EPS Surprise

Prudential Financial, Inc. Price and EPS Surprise | Prudential Financial, Inc. Quote

Zacks Rank: Prudential Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions. 

Stocks to Consider

Some stocks from the finance sector with the right combination of elements to outshine estimates this time around are as follows:

Apollo Investment Corporation AINV is set to report fourth-quarter earnings on Feb 6 and has an Earnings ESP of +0.72%. The company has a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.