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Prudential Financial Set to Grow When Baby Boomers Retire

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On Sep 24, 2015 we issued an updated research report on Prudential Financial, Inc.PRU .

Prudential's Retirement segment, which has been contributing largely to its solid results, is set to benefit from expansion in the pension risk transfer business. There has been a worldwide escalation in the pension de-risking demand, with the U.K. emerging as the leading market. The company is striving to build its leadership position in a market which presents great potential.

Prudential is also set to benefit from huge demand for retirement benefits' products for baby boomers. The U.S. Census Bureau projects that nearly 25% of the population will be 65 years or more by 2050. The company's expansive distribution network with branding will give it a competitive edge.

The inorganic growth story of Prudential also sounds impressive with strategic acquisitions contributing to its results. Also, a solid international presence gives it more organic growth opportunities than its peers.

Its solid operational performance helps it to engage in shareholder-friendly moves. Also, maintaining robust capital and liquidity shields the company from market volatility and enables it to retain the financial strength and flexibility needed to pursue opportunities, consistent with its long-term strategy.

Nonetheless, Prudential's exposure to products like annuities and universal life, which lead to minimum returns, will strain its capital. A sustained soft interest rate environment will continue to hurt results. Also, SIFI capital standards could cap the company's capital deployment ability.

With respect to earnings results, second quarter earnings outperformed the Zacks Consensus Estimate and increased year over year. With respect to the earnings trend, this Zacks Rank #3 (Hold) multiline insurer delivered positive surprises in two of the last four quarters, with an average beat of 3.61%.

The Zacks Consensus Estimate witnessed upward revisions as most of the analysts revised their estimates higher in the last 60 days. The same rose 4.2% to $10.53 for 2015 and 1% to $10.44 for 2016. The expected long-term earnings growth is currently pegged at 10.3%.

Stocks to Consider

Some better-ranked insurers are Cincinnati Financial Corp. CINF , Assured Guaranty Ltd. AGO and Old Republic International Corporation ORI . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PRUDENTIAL FINL (PRU): Free Stock Analysis Report

CINCINNATI FINL (CINF): Free Stock Analysis Report

ASSURED GUARNTY (AGO): Free Stock Analysis Report

OLD REP INTL (ORI): Free Stock Analysis Report

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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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