Prudential Financial Stock To Post Mixed Results In Q4

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Trefis
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PRU
Prudential Financial

Prudential Financial (NYSE: PRU) is scheduled to report its fiscal Q4 2022 results on Tuesday, February 7, 2023 (after market close). We expect Prudential Financial to top the consensus estimates of earnings, but revenues will miss the mark. The company posted mixed results in the last quarter, with total revenues (GAAP) of $20.5 billion – down 5% y-o-y. It was mainly because of a drop in other income and net realized investment gains. In addition, the asset management fees and net investment income also saw negative growth in the quarter. On the flip side, the top line was somewhat supported by growth in total premiums. We expect the same trend to continue in the fourth quarter.

Our forecast indicates that Prudential Financial’s valuation is $104 per share, which is 2% above the current market price of around $102. Our interactive dashboard analysis on Prudential Financial’s Earnings Preview has more details. 

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(1) Revenues are likely to miss the consensus estimates

Prudential Financial’s revenues decreased 14% y-o-y to $46.7 billion in the first three quarters of 2022. It was primarily driven by a decrease in other income, net realized investment losses, and net investment income, partially offset by a 14% rise in total premiums.

  • The premiums grew 14% y-o-y to $31.3 billion in the first three quarters of 2022. It was due to growth in the U.S. business, mainly driven by the institutional retirement strategies category. That said, the growth was somewhat offset by lower revenue in the international segment. We expect the same trend to continue in Q4.
  • The net investment income decreased 13% y-o-y to $11.9 billion in the first nine months. We expect the Q4 results to be on similar lines.
  • Overall, we estimate Prudential Financial’s revenues to remain around $59.5 billion in FY2022 and $57.8 billion in FY2023.

Trefis estimates Prudential Financial’s fiscal Q4 2022 net revenues to be around $13.08 billion, approximately 4% below the $13.61 billion consensus estimate.

(2) EPS is likely to top the consensus estimates

Prudential Financial Q4 2022 adjusted earnings per share (EPS) is expected to be $2.54 per Trefis analysis, around 1% above the consensus estimate of $2.51. The company’s net income declined from $6.5 billion to $880 million in the first nine months of 2022. It was partly due to lower revenues and partly due to higher expenses as a % of revenues. That said, we expect the expense figure to see some improvement in the fourth quarter. 

Moving forward, Prudential Financial is likely to report an annual GAAP EPS of $14.41 for the full-year 2023. 

(3) Stock price estimate is 2% more than the current market price

We arrive at Prudential Financial’s valuation, using an EPS estimate of around $14.41 and a P/E multiple of just above 7x in fiscal 2023. This translates into a price of $104, which is 2% above the current market price of around $102. 

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 

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 PRU Return -3% 2% -2%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio 3% 15% 261%

[1] Month-to-date and year-to-date as of 2/6/2023
[2] Cumulative total returns since the end of 2016

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