Prudential Financial, Inc. PRU has been gaining momentum on the back of higher premiums, strategic acquisitions, favorable underwriting results and effective capital deployment.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has lost 23.6% compared with the industry’s decrease of 14.5%.
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Return on Equity
PRU’s return on equity for the trailing 12 months is 14.1%, which expanded 480 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Optimistic Growth Projections
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings per share is pegged at $11.97 and $12.87, indicating a respective year-over-year increase of 26.5% and 7.4%.
Prudential Financial’s international businesses remain well-poised to gain from continued business growth, higher net investment spread, lower expenses and higher earnings from joint venture investments, as well as favorable underwriting results.
U.S. businesses should continue to gain from a higher net investment spread, which includes benefits from variable investment income, lower expenses on the back of cost-saving initiatives and rising interest rates. Given its leading position in universal, term and variable life insurance and expanding Retirement business, premium growth is likely to continue in the coming quarters.
The U.S. business continues to shift toward higher growth and less market-sensitive products and markets, enhance customer experience, while reducing costs and further expand addressable markets.
The multi-line insurer continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In the third quarter of 2022, the company acquired a 33% minority interest in Alexander Forbes Group Holdings Limited in South Africa. This investment is consistent with PRU’s strategic focus internationally on higher-growth emerging markets. The deal furthers the partnership’s specific objective to identify and make strategic investments in high-quality financial services companies in selected African geographies.
PRU executed a number of strategic initiatives to reduce market sensitivity and increase growth potential, including the expansion of the cost-saving program. PRU achieved $820 million of annual run rate cost savings, exceeding the target of $750 million a year ahead of schedule. It leverages new systems and technologies to enhance digital underwriting, claims and fund processing capabilities, thus improving efficiency.
Prudential Financial’s solid financial position provides it with the flexibility to execute its transformation and invest in the long-term growth of businesses.
PRU’s capital deployment is supported by its sturdy balance sheet strength that included highly liquid assets of $4.6 billion at the end of the first quarter and a capital position that continues to support an AA financial strength rating.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are American International Group, Inc. AIG, Radian Group Inc. RDN and Old Republic International Corporation ORI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International’s earnings surpassed estimates in three of the last trailing four quarters and missed in one, the average being 9.22%. In the past year, AIG has lost 12.9%.
The Zacks Consensus Estimate for AIG’s 2023 and 2024 earnings per share is pegged at $6.47 and $7.79, indicating a year-over-year increase of 42.2% and 20.4%, respectively.
Radian Group’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 38.72%.
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved 6.5% and 1.5% north, respectively, in the past seven days. In the past year, the insurer has gained 12.5%.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.89%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 9% and 2.1% north, respectively, in the past 30 days. In the past year, the insurer has gained 9.1%.
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