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What's in Store for Prudential (PRU) This Earnings Season?

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Prudential Financial, Inc. PRU is slated to report third-quarter 2021 results on Nov 2, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 28.64%.

Factors to Consider

A higher level of sales, increased net investment spread, and favorable underwriting results are likely to have aided Prudential’s third-quarter performance.

Continued business growth, higher net investment spread results, lower expenses, and a more favorable impact of the annual assumption update are likely to have contributed to the performance of the International Insurance segment. The upside is likely to have been offset by lower earnings from acquired co-investment in its Chilean pension joint venture and less favorable underwriting results, owing to higher COVID-19 claims in Brazil.

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

The U.S. business is likely to have benefited from higher net investment spread results, higher fee income, and a more favorable impact from annual assumption update. The upside is likely to have been offset by less favorable underwriting experience driven by COVID-related mortality.

The retirement business is likely to have benefited from higher net investment spread results. The company expects the pandemic may impact sales volumes.

Higher net spread and more favorable underwriting are likely to have driven the Group Insurance business in the to-be-reported quarter. The upside is likely to have been affected by higher expenses. The company expects COVID-19 to continue to result in elevated mortality levels and thus increase life insurance claims. It also expects elevated unemployment to drive increased disability claims in this business. The pandemic may also impact sales volumes and the utilization of workplace benefits.

PGIM is likely to have benefited from higher asset management fees and higher service, distribution and other revenues. The upside is likely to have been offset by lower other related revenues and higher expenses.

Assets under management are likely to have benefited from market appreciation, strong investment performance and fixed income flows.
The company estimates net investment income to be reduced by $10 million. It will reflect the difference between new money rates and disposition yields of investment portfolio.

Expenses are likely to have decreased due to lower policyholders’ benefits, interest credited to policyholders’ account balances, amortization of deferred policy acquisition costs, and general and administrative expenses.

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

Individual life sales are likely to have increased in the to-be-reported quarter as higher variable life sales offset lower sales of other policies.

Prudential estimates third-quarter earnings per share to be $3.

The Zacks Consensus Estimate for earnings per share is pegged at $2.68, indicating a decline of 16.5% from the year-ago period reported figure. The Zacks Consensus Estimate for revenues is pegged at $13.2 billion, indicating a decline of about 0.7% from the year-ago reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict 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). This is not the case as you can see below.

Earnings ESP: Prudential has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.68. 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 4 (Sell).

Stocks to Consider

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

Cigna Corporation CI has an Earnings ESP of +2.19% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

MetLife, Inc. MET has an Earnings ESP of +1.20% and a Zacks Rank #3.

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +25.79% and a Zacks Rank of 3.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MetLife, Inc. (MET) : Free Stock Analysis Report

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

RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report

Cigna Corporation (CI) : Free Stock Analysis Report

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