On May 16, 2013, shares of
Prudential Financial, Inc.
) hit a 52-week high of $68.45. The momentum was driven by a
strong first quarter, which included a 20.6% positive surprise,
rating affirmation, and successful closure of the acquisition of
life insurance business of
The Hartford Financial Services Group Inc.
Prudential reported first-quarter 2013 earnings on May 1.
Adjusted operating earnings came in at $2.28 per share, higher
than the Zacks Consensus Estimate of $1.89. Results also exceeded
the year-ago earnings of $1.61 per share.
Prudential reported net loss of $1.55 per share in the first
quarter of 2013, which was narrower than the prior-year loss of
Recently A.M. Best Co. reiterated the issuer credit ratings
(ICR) of 'a-' on Prudential. Concurrently, the rating agency
reiterated the financial strength rating (FSR) of A+ (Superior)
and ICR of 'aa-' of the domestic life/health insurance
subsidiaries of Prudential. It also affirmed the debt ratings.
Outlook remained stable.
Prudential also completed the purchase of Hartford Financial's
individual life block and two significant pension risk transfer
transactions. The acquisition will help Prudential to acquire a
place among the top five largest individual life insurance
companies in the U.S. in terms of new recurring premium sales.
Prudential will also acquire leadership positions in universal,
term and variable life insurance.
Additionally, valuation for Prudential looks fair. Though the
shares are trading at a discount to the peer group average both
on a price-to-book basis and on a forward price-to-earnings
basis, return on equity is lower than the peer group average.
Nevertheless, the 1-year return on the stock is 30.5%, much above
the S&P's return of 17.6%.
Prudential carries a Zacks Rank #2 (Buy).
Other stocks within our coverage
CNO Financial Group, Inc.
) both carrying Zacks Rank #2 (Buy) are worth considering.
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
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