On Aug 20, we issued an updated research report on
Prudential Financial, Inc.
). Earlier during the month, the company reported core earnings of
$2.49 per share in the second quarter, beating the Zacks Consensus
Estimate of $2.35. Earnings also grew 8.3% on a year-over-year
Results benefitted from higher fees, mainly driven by growth in
account values and assets under management in the company's
Annuities and Asset Management businesses; improved claims
experience in Group Insurance business; as well as continued growth
of the International Insurance business. The company's bottom-line
strength was also supported by lower share count due to share
Prudential is a niche player in the life insurance market and
boasts a well-diversified business profile with reach in different
markets and a broad product portfolio.
Prudential is set to benefit from the aging American population.
The company will witness huge demand for retirement benefits
products as baby boomers retire.
Moreover, the integration of the Individual Life Insurance
business of The Hartford Financial Services Group, Inc. (
) acquired in Jan 2013 remains on track and is delivering product
and distribution benefits.
The company also has significant overseas business with presence
in Japan, Korea and Brazil and is trying to tap future potential
opportunities in India, China and Malaysia. The company's
international operations are expected to accrue significantly to
the company's return on equity.
Prudential is also a leading global asset manager with a
diversified product suite and a broad range of investment
capabilities. The company's assets under management have grown at
an annual rate of 14% over the past 5 years.
Additionally, Prudential's Retirement segment is set to greatly
benefit from its penetration into the pension risk transfer
business. The company has a strong foothold in U.K. longevity
However, we remain cautious on Prudential's U.S. Group insurance
business as poor disability margins pressure results. Also,
Prudential's exposure to products which guarantees minimum return
and stricter capital standards with regard to SIFI regulations,
will keep its capital under pressure.
This Zacks Rank #3 (Hold) insurer has witnessed an increase in
earnings estimates for 2014 following better-than-expected
second-quarter results. The Zacks Consensus Estimate for 2014 has
gone up 1.7% to $9.67 as 13 of 16 estimates moved north over the
last 30 days.
Other Stocks to Consider
Better-ranked stocks worth considering include, FBL Financial
Group Inc. (
), BB Seguridade Participa (
) and Fortegra Financial Corporation (
).All these stocks sport a Zacks Rank #2 (Buy).
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PRUDENTIAL FINL (PRU): Free Stock Analysis
FBL FINL GRP-A (FFG): Free Stock Analysis
FORTEGA FIN CP (FRF): Free Stock Analysis
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