Prudential Financial (PRU) Q4 Earnings: Is a Beat in Store?

We expect Prudential Financial, Inc. PRU to surpass expectations in fourth-quarter 2017 results after the market closes on Feb 7.

Why a Likely Positive Surprise?

Our proven model shows that Prudential Financial has the right combination of the two key ingredients to beat estimates this quarter.

Zacks ESP: Prudential Financial has an Earnings ESP of +0.87%. This is because the Most Accurate estimate of $2.62 is higher than the Zacks Consensus Estimate of $2.60. The positive ESP indicates a likely earnings surprise. 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 and EPS Surprise | Prudential Financial, Inc. Quote

 

Zacks Rank: Prudential Financial holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP as stocks with a bullish Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) along with a positive Earnings ESP have significantly higher chances of an earnings beat.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.  

Factors Driving the Better-Than-Expected Earnings

Prudential Financial is likely to have witnessed bottom-line growth in the soon-to-be-reported quarter owing to expanded product offerings and broader distribution capabilities. The Zacks Consensus Estimate for the period is pegged at $2.60 per share, reflecting a year-over-year increase of 5.7%. To top it all, share buyback is expected to have added to the bottom-line upside.

Moreover, the company might experience favorable results at its U.S. Retirement Solutions and Investment Management segment, owing to its penetration and leadership in the pension risk transfer business. The Zacks Consensus Estimate for pretax operating profit is pegged at $985 million, representing a 2.2% increase year over year.

Also, the Multi line insurer’s international businesses are anticipated to have displayed a better-than-expected performance with its Life Planner and Gibraltar businesses likely registering stable core growth and good underwriting margins.

Riding on higher Asset Management fees, the company might have witnessed Asset Under Management (AUM) growth in the yet-to-be-reported quarter.

Additionally, the company is projected to benefit from a gradually improving interest rate environment, favoring investment income from higher invested asset balances.

However, increase in expenses has likely weighed on the desired margin expansion, hurting the company’s overall performance in turn.

Other Stocks to Consider

Some other stocks worth considering from the insurance industry with the right combination of elements to outshine estimates this time around are as follows:

CNA Financial Corporation CNA is set to report fourth-quarter earnings on Feb 12. The stock has an Earnings ESP of +2.75% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNO Financial Group, Inc. CNO has an Earnings ESP of +1.61% and a Zacks Rank #2. It is set to announce fourth-quarter earnings on Feb 13.

Sun Life Financial Inc. SLF has an Earnings ESP of +0.71% and a Zacks Rank #3. The company is slated to release fourth-quarter earnings on Feb 14.

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