Prudential (PRU) Q1 Earnings Top, Revenues Miss Estimates

Prudential Financial, Inc.’s PRU first-quarter 2018 adjusted net income of $3.08 per share beat the Zacks Consensus Estimate of $2.99 by 3%. The bottom line also improved 10.4% year over year.

Prudential Financial, Inc. Price, Consensus and EPS Surprise

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

 

Improved performances at Investment Management Division and International Insurance aided the above upside.

Behind the Headlines

Total revenues rose 7.2% year over year to $12.9 billion on the back of 15% growth in premiums and a 1.3% increase in policy charges and fee income, partially offset by 0.5% lower net investment income. However, the top line missed the Zacks Consensus Estimate by 5.9%.

Total benefits and expenses of nearly $11.2 billion increased 7.8% year over year in the quarter under review. This increase in expenses is mainly attributable to higher insurance and annuity benefits, interest expense, amortization of acquisition costs and general and administrative expenses.

Quarterly Segment Update

Total U.S. Individual Solutions reported adjusted operating income of $555 million, down 5.3% year over year. This downside was attributable to a nearly 67% drop in contribution from Individual Life.

Total U.S. Workplace Solutions adjusted operating income was $375 million, down 13.7% from the year-ago quarter, attributable to lower contribution from Retirement.

Total Investment Management Division adjusted operating income improved 18.4% to $232 million, driven by higher asset management fees.

Total International Insurance reported adjusted operating income of $856 million, up 7.1% year over year, driven by higher contribution from Life Planner and Gibraltar Life and Other operations.

Corporate and Other Operations reported adjusted operating loss of $294 million, narrower than the loss of $352 million in the year-ago quarter.

Financial Update

Cash and cash equivalents of $15.7 billion at first-quarter end increased 17.8% year over year.

As of Mar 31, 2018, Prudential Financial’s assets under management increased 6.9% to $1.4 trillion year over year. Adjusted book value, a measure of the company’s net worth, was $93.55 per share as of Mar 31, 2018, up 15.3% year over year.

Operating return on average equity was 13.7%, having contracted 40 basis points year over year.

Debt balance totaled $15.5 billion as of Mar 31, 2018, down from $18.6 billion as of Dec 31, 2017.

Zacks Rank

Prudential Financial holds a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other firms from the insurance industry having reported first-quarter earnings so far, the bottom line of Radian Group Inc. RDN, The Hartford Financial Services Group, Inc. HIG and MGIC Investment Corporation MTG surpassed the respective Zacks Consensus Estimate.

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