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Prudential (PRU) Q1 Earnings and Revenues Miss Estimates

Zacks Equity Research

Prudential Financial, Inc.’s PRU first-quarter 2019 operating net income of $3.00 per share missed the Zacks Consensus Estimate by 4.5%. The bottom line also declined 2.6% year over year.

The company witnessed weak performances in PGIM and U.S. Workplace Solutions segments.    

Including one-time items, net income per share of $3.14 declined 29% year over year.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

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

Behind the Headlines

Total revenues of $13.6 billion grew 6% year over year on the back of higher premiums and net investment income. However, the top line missed the Zacks Consensus Estimate of $13.7 billion.

Total benefits and expenses of $11.2 billion increased 8% year over year in the quarter. This increase in expenses was mainly attributable to higher insurance and annuity benefits, interest credited to policyholders’ account balances, interest expense, general and administrative expenses and amortization of acquisition costs.

Quarterly Segment Update

PGIM — global investment management businesses — reported adjusted operating income of $214 million, down 7.8% year over year. This downside was attributable to higher expenses, partially offset by higher asset management fees, reflecting an increase in average assets under management.

PGIM assets under management were $1.2 trillion at the end of the reported quarter.

U.S. Workplace Solutions’ adjusted operating income was $304 million, down 18.3% from the year-ago quarter on lower contribution from Retirement segment and Group Insurance segments.

U.S. Individual Solutions reported adjusted operating income of $577 million, up nearly 4% from the prior-year quarter, driven by higher contribution from Individual Life, partially offset by lower earnings from Individual Annuities.

International Insurance delivered adjusted operating income of $922 million, up 7.7% from the year-earlier period owing to higher income at both Life Planner Operations and Gibraltar Life & Other Operations.

Corporate and Other Operations incurred adjusted operating loss of $412 million, wider than loss of $294 million in the year-ago quarter.

Financial Update

Cash and cash equivalents of $14.7 billion at quarter end decreased 6.8% year over year.

As of Mar 31, 2019, Prudential Financial’s assets under management and administration increased 4.8% to $1.5 trillion year over year.

Adjusted book value, a measure of the company’s net worth, came in at $96.76 as of Mar 31, 2019, up 3.4% year over year.

Operating return on average equity was 12.6%, almost matching the higher end of 12-13% target.

Debt balance totaled $20.9 billion as of Mar 31, 2019, up 5.2% year over year.

Prudential Financial deployed $500 million in share buybacks and increased dividend by 11%.

Zacks Rank

Prudential Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among the other insurance industry players, which have reported first-quarter results, earnings of Aflac Incorporated AFL and Torchmark Corporation TMK beat their respective Zacks Consensus Estimate while Reinsurance Group of America Incorporated RGA missed the same.

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