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

Zacks Equity Research

Prudential Financial, Inc. PRU is slated to report fourth-quarter 2019 results on Feb 4, after market close.

Factors to Consider

Prudential’s fourth-quarter performance is likely to have benefited from growth in asset-based businesses, improved margins in Group Insurance business, solid international operations and deeper reach in the pension risk transfer market.

The retirement business is expected to have benefited from a solid pension risk transfer pipeline.

U.S. Financial Wellness is likely to have benefited from advice, investment, and retirement income and protection solutions, thus aiding full-service retirement plan sales and Group Insurance sales.

Growing Japan business, leadership position in Japan life insurance market and businesses in Brazil, Chile, Indonesia, India, China and Africa are likely to have aided the International Insurance segment.

Revenues are expected to have been boosted by increase in recurring premium sales, expanded product offerings, broader distribution capabilities, policy charges as well as fee income. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $14.23 billion, which implies a decline of 19.8% from the figure reported in the year-ago quarter.

However, expenses are likely to have increased attributable to higher interest credited to policyholders' account balances, interest expense, amortization of acquisition costs, and general and administrative expenses. This might have caused margin contraction.

Lower interest rate is likely to have weighed on reinvestment rates, thus suggesting lower net investment income.

Continued share buybacks might have provided additional upside to the bottom line.

The Zacks Consensus Estimate for earnings per share is pegged at $2.01, indicating 17.6% decrease from the year-ago quarter’s reported figure.

The company delivered a positive earnings surprise in the third quarter of 2019.

Prudential Financial, Inc. Price and EPS Surprise

Prudential Financial, Inc. Price and EPS Surprise

Prudential Financial, Inc. price-eps-surprise | Prudential Financial, Inc. Quote

What Our Model Says

Our proven model predicts an earnings beat for Prudential this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Prudential has an Earnings ESP of +0.16%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Prudential currently carries a Zacks Rank #3.

Other Stocks to Consider

Some other stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +18.32% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln National Corporation LNC has an Earnings ESP of +0.54% and a Zacks Rank of 2.

MetLife, Inc. MET has an Earnings ESP of +0.57% and a Zacks Rank of 2.

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