Prudential Financial (NYSE: PRU) is scheduled to report its fiscal Q2 2022 results on Tuesday, August 2 (after market close). We expect Prudential Financial to top the consensus estimates of revenues and earnings. The insurance giant posted mixed results in the last quarter, with total revenues (GAAP) of $13.2 billion – down 22% y-o-y. It was primarily because of a significant drop in net realized investment gains, followed by lower asset management fees, commissions & other income. However, the negative impact was somewhat offset by a 5% growth in the total premiums. The premiums mainly benefited from growth in the U.S retirement business. We expect the same trend to continue in the second quarter.
Our forecast indicates that Prudential Financial’s valuation is $113 per share, which is 13% above the current market price of around $100. Our interactive dashboard analysis on Prudential Financial’s Earnings Preview has more details.
(1) Revenues expected to edge past the consensus estimates
Prudential Financial’s revenues increased 24% y-o-y to $70.9 billion in 2021. It was driven by a 12% growth in the premiums, followed by a 5% increase in the net investment income and a 24% rise in the asset management fees & other income. Further, total realized investment gains (losses) jumped from -$3.9 billion to $4 billion.
- The premiums grew 5% y-o-y in the first quarter of 2022. It was due to a 24% growth in the U.S. business, mainly driven by a 52% rise in the retirement segment. On the flip side, the international segment posted a 4% y-o-y drop in the premiums figure. We expect the same trend to continue in the second quarter.
- The net investment income saw marginal growth in the first quarter of the year. We expect the stream to benefit from higher investment yields in Q2.
- Overall, we estimate Prudential Financial’s revenues to remain around $59.9 billion for full-year 2022.
Trefis estimates Prudential Financial’s fiscal Q2 2022 net revenues to be around $12.52 billion, 2% above the $12.27 billion consensus estimate.
(2) EPS is likely to beat the consensus estimates
Prudential Financial Q2 2022 adjusted earnings per share (EPS) is expected to be $2.45 per Trefis analysis, almost 4% above the consensus estimate of $2.36. The company’s net income improved from -$374 million to $7.6 billion in 2021. It was due to revenue growth and lower expenses as a % of revenues. That said, the expenses as a % of revenues increased in the first quarter of 2022. This coupled with lower revenues led to an adjusted net income of -$31 million – down from $2.8 billion. We expect the expense figure to see some improvement in the second quarter. Overall, Prudential Financial is likely to report an annual GAAP EPS of $13.25 for full-year 2022.
(3) Stock price estimate is 13% higher than the current market price
We arrive at Prudential Financial’s valuation, using an EPS estimate of around $13.25 and a P/E multiple of just below 9x in fiscal 2022. This translates into a price of $113, which is 13% above the current market price of around $100.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
With inflation rising and the Fed raising interest rates, Prudential Financial has fallen 8% this year. Can it drop more? See how low can Prudential Financial stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||0%||-13%||84%|
|Trefis Multi-Strategy Portfolio||0%||-13%||241%|
 Month-to-date and year-to-date as of 8/1/2022
 Cumulative total returns since the end of 2016