Prudential Financial, Inc. PRU is slated to report second-quarter 2023 earnings on Aug 1, 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 fee income, net of distribution expenses and other associated costs in Individual Retirement Strategies business and lower income on non-coupon investments. The downside is likely to have been partially offset by higher underwriting results and more favorable disability results in its Group Insurance business.
Prudential Financial’s international businesses are likely to have been affected by unfavorable net impact from foreign currency exchange rates due to lower net investment spread results and underwriting results.
Group Insurance business in the to-be-reported quarter is likely to have benefited from higher underwriting results in group life business, improved underwriting results in group disability business and more favorable claims experience on long-term disability contracts as well as business growth. The upside is expected to have been partially offset by lower net investment spread results driven by lower income on non-coupon investments.
PGIM is likely to have decreased due to lower asset management fees, net of related expenses. The downside is likely to have been partially offset by higher other related revenues, net of related expenses, and improved service, distribution and other revenues.
Assets under management are likely to have been affected by higher interest rates, equity market depreciation, net outflows and unfavorable foreign exchange rate impacts.
Net investment income is likely to have benefited from higher fixed-income reinvestment rates and improved returns on short-term investments based on an increase in short-term rates. We expect net investment income to increase 1.1% to $3.2 billion in the to-be-reported quarter.
Expenses are likely to have increased because of higher policyholders’ benefits, interest credited to policyholders’ account balances, dividends to policyholders, and general and administrative expenses. We expect total expenses to decrease 8% to $10.8 billion.
The Individual Retirement Strategies business is likely to have benefited from higher net investment spread results due to more favorable short-term interest rates and growth in indexed variable annuities. The upside is likely to have been partially offset by lower fee income, net of distribution expenses and other associated costs, unfavorable equity markets and net outflows.
The company estimates earnings per share to be $3.29 for the second quarter of 2023.
The Zacks Consensus Estimate for earnings per share is pegged at $3.04, indicating an increase of 74.7% from the year-ago period’s reported figure.
The Zacks Consensus Estimate for revenues is pegged at $12.6 billion, indicating a decline of 7.9% from the year-ago reported figure.
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 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $3.04. 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.
Stocks to Consider
Some insurance stocks with the right combination of elements to deliver an earnings beat this time around are:
Lemonade, Inc. LMND has an Earnings ESP of +3.10% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2023 earnings indicates a year-over-year increase of 7.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
LMND’s earnings beat estimates in three of the last four quarters and missed in the other one.
American Equity Investment Life Holding Company AEL has an Earnings ESP of +1.12% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $1.65, indicating a year-over-year increase of 68.3%.
AEL’s earnings beat estimates in three of the last four quarters and missed in the other one.
Brighthouse Financial, Inc. BHF has an Earnings ESP of +0.42% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $3.55, indicating a year-over-year increase of 7.9%.
BHF’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.
