Prudential Financial, Inc. PRU is slated to report first-quarter 2023 earnings on May 2, after market close. PRU delivered a negative earnings surprise in the last reported quarter.
Factors to Consider
The U.S. business is likely to have been affected by lower net investment spread results, due to a decline in variable investment income and net fee income. The downside is likely to have been partially offset by more favorable underwriting results.
Prudential Financial’s international businesses are likely to have been affected by lower net investment spread results and favorable underwriting results, including unfavorable policyholder behavior as well as higher expenses.
Group Insurance business in the to-be-reported quarter is likely to have benefited from more favorable underwriting results in both group life and disability. The upside is expected to have been partially offset by lower net investment spread results and higher expenses.
PGIM is likely to have decreased due to lower asset management fees, incentive fees, agency income and transaction fees. The downside is expected to have been partially offset by lower expenses.
Assets under management are likely to have been affected by higher interest rates and widening credit spreads, as well as unfavorable equity markets, lower performance-based incentive fees, narrower commercial mortgage origination revenues and seed and co-investments results.
Net investment income is likely to have decreased in the to-be-reported quarter due to less income on non-coupon investments. The downside is likely to have been partially offset by business growth and higher interest rates. We expect net investment income to be $3.3 billion in the to-be-reported quarter.
Expenses are expected to have decreased because of lower insurance and annuity benefits, amortization of acquisition costs and general and administrative expenses. We expect expenses to be $11.4 billion in the to-be-reported quarter.
The Individual Retirement Strategies business is likely to have decreased in the to-be-reported quarter due to lower fee income, net of distribution expenses and other associated costs because of a reduction in account values. The downside might have been partially offset by higher net investment spread results.
Individual life sales are likely to have decreased in the to-be-reported quarter due to lower variable life sales.
Prudential estimates earnings per share to be $3.07 for the first quarter of 2023.
The Zacks Consensus Estimate for earnings per share is pegged at $3.02, indicating a decline of 4.73% from the year-ago period’s reported figure. We expect the bottom line to be $3.07 per share for the to-be-reported quarter.
The Zacks Consensus Estimate for revenues is pegged at $13.2 billion, indicating a decline of 2.9% from the year-ago reported figure. We expect revenues of $12.9 billion in the to-be-reported quarter.
What Our Quantitative Model Unveils
Our proven model does not predict an earnings beat for Prudential Financial this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that increases the odds of an earnings beat. This is not the case here as you can see below.
Earnings ESP: Prudential Financial has an Earnings ESP of -0.27%. This is because the Most Accurate Estimate of $3.01 is pegged lower than the Zacks Consensus Estimate of $3.02. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. price-eps-surprise | Prudential Financial, Inc. Quote
Zacks Rank: Prudential Financial has a Zacks Rank #3 at present. 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:
RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +3.37% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $7.34, indicating an increase of 109.7% from the year-ago reported figure.
RNR’s earnings beat estimates in two of the last four quarters and missed in the other two.
CNO Financial Group, Inc. CNO has an Earnings ESP of +1.29% and a Zacks Rank of 1 at present. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at 65 cents, indicating an increase of 54.7% from the year-ago reported figure.
CNO’s earnings beat estimates in three of the last four quarters and missed in one.
ProAssurance Corporation PRA has an Earnings ESP of +41.89% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at 15 cents, indicating an increase of 7.1% from the year-ago reported figure.
PRA’s earnings beat estimates in two of the last four quarters and missed in the other two.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
