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Prudential Financial (PRU) Down 3.5% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Prudential Financial, Inc.PRU . Shares have lost about 3.5% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is PRU due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Prudential (PRU) Q4 Earnings, Revenues Beat Estimates

Prudential Financial, Inc.'s fourth-quarter 2017 adjusted net income of $2.69 per share beat the Zacks Consensus Estimate of $2.60 by 3.46%. The bottom line also improved about 9.3% year over year.

Improved performances at Total U.S. Individual Solutions, Total Investment Management Division and Total International Insurance aided the above upside.

Behind the Headlines

Total revenues rose 13.6% year over year to $15.3 billion on the back of 19.5% growth in policy charges and fee income, 4.9% increase in policy charges and fee income, 5% higher net investment income and a 12.7% rise in asset management fees, commissions and other income. Also, the top line surpassed the Zacks Consensus Estimate of $12.9 billion.

Total benefits and expenses of nearly $13.7 billion increased 14.4% year over year in the quarter. This increase in expenses is mainly attributable to higher insurance and annuity benefits plus improved general and administrative expenses.

Full-Year Highlights

Adjusted net income of $10.58 per share beat the Zacks Consensus Estimate of $10.49. The bottom line also improved about 15.9% year over year.

Total revenues improved 4% year over year to $53.6 billion. The top line was almost in line with the Zacks Consensus Estimate.

Quarterly Segment Update

Total U.S. Individual Solutions reported adjusted operating income of $639 million, up 14.1% year over year. This upside was driven by higher contribution from Individual Annuities.

Total U.S. Workplace Solutions adjusted operating income was $313 million, down nearly 13.3% from the year-ago quarter, attributable to lower contribution from both Retirement and Group Insurance.

Total Investment Management Division adjusted operating income surged 36.6% to $306 million.

Total International Insurance reported adjusted operating income of $777 million, up 2.9% year over year.

Corporate and Other Operations reported adjusted operating loss of $463 million, wider than the loss of $441 million in the year-ago quarter.

Financial Update

Cash and cash equivalents of $14.5 billion at 2017-end increased from $14.1 billion at 2016-end.

As of Dec 31, 2017, Prudential Financial's assets under management increased 10.3% to $1.4 trillion from $1.3 trillion as of Dec 31, 2016. Adjusted book value, a measure of the company's net worth, was $88.28 per share as of Dec 31, 2017, up 11.8% year over year.

Operating return on average equity was 12.6%, flat year over year. Debt balance totaled $18.6 billion as of Dec 31, 2017, down from $19.2 billion as of Dec 31, 2016.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

Prudential Financial, Inc. Price and Consensus

Prudential Financial, Inc. Price and Consensus | Prudential Financial, Inc. Quote

VGM Scores

At this time, PRU has a subpar Growth Score of D, a grade with the same score on the momentum front. 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.

The company's stock is suitable soley for value based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions indicates a downward shift. Notably, PRU has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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