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Will Prudential (PRU) Retain Its Beat Streak in Q4 Earnings?

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Prudential Financial, Inc. PRU is slated to report fourth-quarter 2021 earnings results on Feb 3, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 34.1%.

Factors to Consider

Higher asset management fees, increased net investment spread, and business growth are likely to have aided Prudential’s fourth-quarter performance.

Higher sales are likely to have boosted the Life Planner and Gibraltar Life operations in the fourth quarter.

The U.S. business is likely to have benefited from higher net investment spread, driven by increased variable investment income and fee income. The upside is likely to have been offset by less favorable underwriting experience driven by COVID-related mortality.

Prudential Financial’s international businesses are likely to have gained from continued business growth, higher net investment spread, lower expenses, and higher earnings from joint venture investments. The upside is likely to have been offset by less favorable underwriting results due to higher COVID-19 claims.

The retirement business is likely to have benefited from higher net investment spread results.

Lower other related revenues and higher expenses are likely to have affected the Group Insurance business in the to-be-reported quarter. The downside is likely to have been partially offset by higher asset management fees.

Prudential Financial expects underwriting results to be adversely impacted by approximately $185 million in U.S. Businesses, predominantly in the Group Insurance business, and approximately $20 million in International Businesses in the fourth quarter.

PGIM is likely to have decreased due to lower other related revenues and higher expenses. The downside is likely to have been offset by an increase in asset management fees.

Assets under management are likely to have benefited from market appreciation, strong investment performance and third-party inflows.

Prudential estimates net investment income to be reduced by about $10 million. It will reflect the difference between new money rates and disposition yields of investment portfolio.

Expenses are likely to have increased due to higher policyholders’ benefits, dividends to policyholders and general and administrative expenses. Prudential expects seasonal expenses and other items to be higher in the fourth quarter by $140 million.

Individual Annuities is likely to have benefited from higher fee income, net of distribution expenses and other associated costs and higher net investment spread results.

Individual life sales are likely to have increased in the to-be-reported quarter due to higher variable life sales.

Prudential estimates fourth-quarter earnings per share to be $3.05.

The Zacks Consensus Estimate for earnings per share is pegged at $2.39, indicating a decline of 18.4% from the year-ago period reported figure. The Zacks Consensus Estimate for revenues is pegged at $13.4 billion, indicating a decline of about 10.7% from the year-ago reported figure.

What the Zacks Model Says

Our proven model predicts an earnings beat for Prudential this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Prudential has an Earnings ESP of +0.36%. This is because the Most Accurate Estimate of $2.40 is pegged higher than the Zacks Consensus Estimate of $2.39. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Prudential Financial, Inc. Price and EPS Surprise

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

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

Zacks Rank: Prudential currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Arch Capital Group ACGL has an Earnings ESP of +1.48% and a Zacks Rank of 2. The Zacks Consensus Estimate for ACGL’s 2022 earnings implies a year-over-year increase of 31.5%.

Arch Capital Group’s earnings surpassed estimates in each of the last four quarters, the average surprise being 32.7%. The Zacks Consensus Estimate for ACGL’s 2022 earnings has moved north by 1.1% in the past 30 days.

CNA Financial CNA has an Earnings ESP of +2.65% and a Zacks Rank of 3. The Zacks Consensus Estimate for CNA’s 2022 earnings implies a year-over-year increase of 10.6%.

CNA Financial’s earnings surpassed estimates in each of the last four quarters, the average surprise being 19.6%.

American International Group AIG has an Earnings ESP of +4.88% and a Zacks Rank of 3. The Zacks Consensus Estimate for AIG’s 2022 earnings implies a year-over-year increase of 15.6%.

American International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 8.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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American International Group, Inc. (AIG) : Free Stock Analysis Report

Prudential Financial, Inc. (PRU) : Free Stock Analysis Report

CNA Financial Corporation (CNA) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

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