Will prudential financial stocks beat the consensus in the second quarter?
Prudential Financial (NYSE: PRU) is scheduled to release its fiscal second quarter 2022 results on Tuesday, August 2 (after market close). We expect Prudential Financial
Our forecast indicates that Prudential Financial valuation is $113 per share, or 13% above the current market price of around $100. Our interactive dashboard analysis on Prudential Financial Earnings Snapshot has more details.
(1) Revenues are expected to exceed consensus estimates
Prudential Financial revenue grew 24% year-on-year to $70.9 billion in 2021. It was driven by 12% growth in premiums, followed by a 5% increase in net investment income and an increase 24% of asset management fees and other income. Additionally, total realized investment gains (losses) increased from -$3.9 billion to $4 billion.
- Premiums increased by 5% year-on-year in the first quarter of 2022. This was driven by a 24% growth in activity in the United States, mainly driven by a 52% increase in the pensions segment. In contrast, the international segment recorded a 4% year-on-year decline in premium revenue. We expect the same trend to continue in the second quarter.
- Net investment income grew marginally in the first quarter of the year. We expect the stream to benefit from higher investment returns in the second quarter.
- Overall, we estimate Prudential Financial’s revenue will remain around $59.9 billion for the full year 2022.
Trefis estimates that Prudential Financial’s second quarter 2022 net revenue will be approximately $12.52 billion, 2% higher than the consensus estimate of $12.27 billion.
(2) EPS expected to exceed consensus estimates
Prudential Financial’s adjusted earnings per share for Q2 2022 are expected to be $2.45 per Trefis analysis, nearly 4% above the consensus estimate of $2.36. The company’s net income increased from -$374 million to $7.6 billion in 2021. This was due to revenue growth and lower expenses as a % of revenue. That said, expenses as a % of revenue increased in the first quarter of 2022. This, coupled with lower revenue, led to adjusted net income of -$31 million, compared to $2.8 billion previously. We expect the spending figure to improve in the second quarter. Overall, Prudential Financial is likely to report an annual GAA
(3) The stock price estimate is 13% above the current market price
We arrive at Prudential Financial valuationusing an EPS estimate of around $13.25 and a P/E multiple just below 9x for fiscal year 2022. This translates to a price of $113, or 13% above the current price of the market around $100.
Note: P/E multiples are based on year-end stock price 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 fall more? See how far Prudential Financial’s stock can go by comparing its drop in past stock market crashes. Here is a summary of how all stocks performed during previous stock market crashes.
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