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What's Awaits Prudential Financial (PRU) in Q1 Earnings?

Zacks Equity Research

Prudential Financial, Inc. PRU is slated to report first-quarter 20198 results on May 1, after market close. The company came up with a positive earnings surprise in two of the last four reported quarters.

Factors to Consider

Prudential’s first-quarter results are likely to benefit from premium sales, greater scale, expanded product offerings and broader distribution capabilities.

Financial Wellness solutions that gained traction are expected to aid full-service retirement plan sales and Group Insurance sales.

Retirement business is expected to generate improved risk-adjusted returns, specifically with less competition, improved risk profile and leadership in the pension risk transfer business.

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

An improved interest rate environment and broader invested asset base should drive investment results.

Revenues are likely to benefit from increase in premiums, investment income, policy charges as well as fee income. The Zacks Consensus Estimate for revenues is pegged at $13.7 billion, indicating an increase of 6.7% from the year-ago reported figure.

However, expenses are likely to increase attributable to higher policyholders’ benefits, amortization of deferred policy acquisition costs as well as general and administrative expenses. This might weigh on operating margin expansion.

Nonetheless, lower share count owing to buybacks is likely to provide a boost to the bottom line. The Zacks Consensus Estimate for earnings per share is pegged at $3.11, indicating nearly 1% increase from the year-ago period reported figure.rudential Financial, Inc. Price and EPS Surprise

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

What Our Quantitative Model States

Our proven model shows that Prudential is likely to beat earnings this season. This is because it has 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 +1.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Prudential Financial carries a Zacks Rank #2, which increases the predictive power of ESP.

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.

Other Stocks to Consider

Some stocks from the insurance industry, which also have the right combination of elements to outshine estimates this time around are as follows:

Cigna Corporation CI is set to report first-quarter earnings on May 2 and has an Earnings ESP of +5.14%. The company has a Zacks Rank of 3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Hartford Financial Services Group, Inc.HIG is set to report first-quarter earnings on May 1 and has an Earnings ESP of +0.27%. The company has a Zacks Rank of 3.

Brighthouse Financial, Inc. BHF is set to report first-quarter earnings on May 6 and has an Earnings ESP of +0.35%. The company has a Zacks Rank of 2.

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