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Why Is Prudential (PRU) Up 5.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Prudential (PRU - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prudential due for a pullback? 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 catalysts.
Prudential Financial, Inc. reported third-quarter 2024 adjusted operating income of $3.48 per share, which beat the Zacks Consensus Estimate by 0.2%. However, the bottom line decreased 3.8% year over year. Total revenues of $19.5 billion surged 94% year over year and beat the Zacks Consensus Estimate by 33.7%. The increase in revenues was due to higher premiums, policy charges and fee income and net investment income.
Prudential Financial's third-quarter results reflect higher asset management fees, favorable underwriting and higher net investment spread results, partially offset by higher expenses.
Operational Update
Total benefits and expenses amounted to $17.8 billion, which doubled year over year in the third quarter. This increase was due to higher insurance and annuity benefits, change in estimates of liability for future policy benefits, interest credited to policyholders' account balances, interest expense, amortization of acquisition costs, and general and administrative expenses. The figure was higher than our estimate of $11.8 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $241 million in the reported quarter increased 14.2% year over year. This increase primarily reflects higher asset management fees, partially offset by higher expenses. The figure was higher than our estimate of $221.4 million. The Zacks Consensus Estimate was $223 million.
PGIM assets under management of $1.400 trillion increased 15% year over year. The increase was due to equity market appreciation, lower interest rates, investment performance and net inflows.
The U.S. Businesses delivered an adjusted operating income of $1.108 billion, which increased 1.8% year over year. The figure was higher than both Zacks Consensus Estimate and our estimate of $1 billion. This increase was due to more favorable underwriting and higher net investment spread results. It was partially offset by lower net fee income and higher expenses.
International Businesses adjusted operating income decreased 5.5% year over year to $766 million in the third quarter. The figure was lower than our estimate of $791.7 million. This decrease was due to less favorable underwriting results and higher expenses. It was partially offset by higher joint venture earnings and higher net investment spread results.
Corporate and Other incurred an adjusted operating loss of $487 million, wider than a loss of $438 million reported a year ago. The figure was wider than our estimate of a loss of $474.7 million. This higher loss was due to higher expenses.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $471 million in the third quarter.
Financial Update
PRU exited the third quarter with cash and cash equivalents of $20.2 billion, which increased 19.6% from 2023-end. Total debt balance of $20 billion increased 2.7% from 2023-end.
As of Sept. 30, 2024, Prudential Financial’s assets under management and administration increased 14.5% year over year to $1.74 trillion. Adjusted book value per common share, a measure of the company’s net worth, was $98.71, which increased 4.8% year over year. Operating return on average equity was 14.2% in the third quarter, which contracted 100 basis points year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Prudential has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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Why Is Prudential (PRU) Up 5.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Prudential (PRU - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Prudential due for a pullback? 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 catalysts.
Prudential Financial Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Prudential Financial, Inc. reported third-quarter 2024 adjusted operating income of $3.48 per share, which beat the Zacks Consensus Estimate by 0.2%. However, the bottom line decreased 3.8% year over year. Total revenues of $19.5 billion surged 94% year over year and beat the Zacks Consensus Estimate by 33.7%. The increase in revenues was due to higher premiums, policy charges and fee income and net investment income.
Prudential Financial's third-quarter results reflect higher asset management fees, favorable underwriting and higher net investment spread results, partially offset by higher expenses.
Operational Update
Total benefits and expenses amounted to $17.8 billion, which doubled year over year in the third quarter. This increase was due to higher insurance and annuity benefits, change in estimates of liability for future policy benefits, interest credited to policyholders' account balances, interest expense, amortization of acquisition costs, and general and administrative expenses. The figure was higher than our estimate of $11.8 billion.
Quarterly Segment Update
Prudential Global Investment Management’s (PGIM) adjusted operating income of $241 million in the reported quarter increased 14.2% year over year. This increase primarily reflects higher asset management fees, partially offset by higher expenses. The figure was higher than our estimate of $221.4 million. The Zacks Consensus Estimate was $223 million.
PGIM assets under management of $1.400 trillion increased 15% year over year. The increase was due to equity market appreciation, lower interest rates, investment performance and net inflows.
The U.S. Businesses delivered an adjusted operating income of $1.108 billion, which increased 1.8% year over year. The figure was higher than both Zacks Consensus Estimate and our estimate of $1 billion. This increase was due to more favorable underwriting and higher net investment spread results. It was partially offset by lower net fee income and higher expenses.
International Businesses adjusted operating income decreased 5.5% year over year to $766 million in the third quarter. The figure was lower than our estimate of $791.7 million. This decrease was due to less favorable underwriting results and higher expenses. It was partially offset by higher joint venture earnings and higher net investment spread results.
Corporate and Other incurred an adjusted operating loss of $487 million, wider than a loss of $438 million reported a year ago. The figure was wider than our estimate of a loss of $474.7 million. This higher loss was due to higher expenses.
Capital Deployment
Prudential Financial managed to return capital to its shareholders in the form of share repurchases worth $250 million and dividends worth $471 million in the third quarter.
Financial Update
PRU exited the third quarter with cash and cash equivalents of $20.2 billion, which increased 19.6% from 2023-end. Total debt balance of $20 billion increased 2.7% from 2023-end.
As of Sept. 30, 2024, Prudential Financial’s assets under management and administration increased 14.5% year over year to $1.74 trillion. Adjusted book value per common share, a measure of the company’s net worth, was $98.71, which increased 4.8% year over year. Operating return on average equity was 14.2% in the third quarter, which contracted 100 basis points year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Prudential has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Prudential has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.