Prudential Hits 52-Week High on Solid Operating Results

On Sep 18, 2014, shares of Prudential Financial, Inc. (PRU) hit a 52-week high of $93.49. The momentum was driven by investors’ optimism over the company’s sound fundamentals featured in its favorable operating performance over past many quarters, including the most recent one.

During the last reported quarter, Prudential reported earnings of $2.49 per share, beating the Zacks Consensus Estimate of $2.35. Earnings also grew 8.3% on a year-over-year basis.

Results benefitted from strong growth in the Annuities, Retirement and Asset Management businesses as well as synergies from the acquisition of the individual life business of Hartford Financial Services Group, Inc. (HIG) in January last year. The company’s bottom-line strength was also supported by lower share count owing to share buyback.

Recently, the company also entered into a pension risk transfer deal with Rothesay Life Limited, which will expand its presence in this growing market.

Overall, investors are upbeat on major businesses of Prudential and expect results to be driven by healthy margins in the international business and strong net flows in the U.S. asset management and institutional retirement segments.

Investors are also optimistic about Prudential, one of the top life insurers in the U.S., which is likely to witness huge demand for retirement benefits’ products as baby boomers retire.

Moreover, Prudential carries enough capital flexibility to supplement organic growth with ongoing share repurchases, which assure investors of strong earnings growth.

Prudential carries a Zacks Rank # 3(Hold).

Better-ranked sector stocks within our coverage include Fortegra Financial Corp. (FRF) and Radian Group Inc. (RDN). Both these stocks carry a Zacks Rank #2 (Buy).