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Prudential (PRU) Down 0.9% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Prudential (PRU - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prudential due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Prudential Financial Q2 Earnings Miss, Revenues Down Y/Y
Prudential Financial, Inc. reported second-quarter 2023 adjusted operating income of $2.94 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 25.6% year over year.
Total revenues of $12,644 million decreased 2.4% year over year and missed the Zacks Consensus Estimate by 0.3%. The decline in revenues was due to lower asset management fees, commissions and other income. Prudential Financial's second-quarter results were affected by declining income from the asset management business. Improving premiums, policy charges, fee income and net investment income partially offset the negatives.
Operational Update
Total benefits and expenses amounted to $11,252 million, which declined 4.7% year over year in the second quarter. This decrease was due to lower insurance and annuity benefits and a change in estimates of liability for future policy benefits. However, the figure surpassed our estimate by 3.6%.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $179 million declined 13.1% year over year. The metric missed our estimate by 10.1%. The decrease primarily reflects lower asset management fees due to net outflows and higher rates in the quarter. The negatives were partially offset by higher other-related revenues.
PGIM assets under management of $1.3 trillion in the reported quarter were up 1% year over year due to appreciation in equity markets, partially offset by higher interest rates and net outflows.
The U.S. Businesses delivered an adjusted operating income of $956 million, which increased 66.8% year over year. The metric beat our estimate by 11.2%. The upside was due to higher net investment spread results and lower net fee income. This segment also benefited from more favorable underwriting results.
International Businesses adjusted operating income increased 13.3% year over year to $784 million in the second quarter. The metric beat our estimate by 10.6%. This increase primarily reflects improving emerging market earnings and business growth.
Corporate and Other incurred an adjusted operating loss of $527 million, wider than $321 million reported a year ago. The metric was higher than our estimate of a loss of $363.1 million. This higher loss was due to higher expenses, negative foreign exchange impact and lower net investment income.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $463 million in the second quarter.
Financial Update
PRU exited the second quarter with cash and cash equivalents of $14,652 million, which decreased from $17,251 million at 2022-end. Total debt balance of $19.6 billion decreased from $20.7 billion at 2022-end.
As of Jun 30, 2023, Prudential Financial’s assets under management and administration increased 1.7% year over year to $1.6 trillion. Adjusted book value per common share, a measure of the company’s net worth, was $97.38, which decreased 0.5% year over year. Operating return on average equity was 12.2% in the second quarter, which improved 280 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Prudential has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Prudential (PRU) Down 0.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Prudential (PRU - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prudential due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Prudential Financial Q2 Earnings Miss, Revenues Down Y/Y
Prudential Financial, Inc. reported second-quarter 2023 adjusted operating income of $2.94 per share, which missed the Zacks Consensus Estimate by 3.3%. However, the bottom line rose 25.6% year over year.
Total revenues of $12,644 million decreased 2.4% year over year and missed the Zacks Consensus Estimate by 0.3%. The decline in revenues was due to lower asset management fees, commissions and other income. Prudential Financial's second-quarter results were affected by declining income from the asset management business. Improving premiums, policy charges, fee income and net investment income partially offset the negatives.
Operational Update
Total benefits and expenses amounted to $11,252 million, which declined 4.7% year over year in the second quarter. This decrease was due to lower insurance and annuity benefits and a change in estimates of liability for future policy benefits. However, the figure surpassed our estimate by 3.6%.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $179 million declined 13.1% year over year. The metric missed our estimate by 10.1%. The decrease primarily reflects lower asset management fees due to net outflows and higher rates in the quarter. The negatives were partially offset by higher other-related revenues.
PGIM assets under management of $1.3 trillion in the reported quarter were up 1% year over year due to appreciation in equity markets, partially offset by higher interest rates and net outflows.
The U.S. Businesses delivered an adjusted operating income of $956 million, which increased 66.8% year over year. The metric beat our estimate by 11.2%. The upside was due to higher net investment spread results and lower net fee income. This segment also benefited from more favorable underwriting results.
International Businesses adjusted operating income increased 13.3% year over year to $784 million in the second quarter. The metric beat our estimate by 10.6%. This increase primarily reflects improving emerging market earnings and business growth.
Corporate and Other incurred an adjusted operating loss of $527 million, wider than $321 million reported a year ago. The metric was higher than our estimate of a loss of $363.1 million. This higher loss was due to higher expenses, negative foreign exchange impact and lower net investment income.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $463 million in the second quarter.
Financial Update
PRU exited the second quarter with cash and cash equivalents of $14,652 million, which decreased from $17,251 million at 2022-end. Total debt balance of $19.6 billion decreased from $20.7 billion at 2022-end.
As of Jun 30, 2023, Prudential Financial’s assets under management and administration increased 1.7% year over year to $1.6 trillion. Adjusted book value per common share, a measure of the company’s net worth, was $97.38, which decreased 0.5% year over year. Operating return on average equity was 12.2% in the second quarter, which improved 280 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Prudential has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.