Prudential Financial, Inc. PRU announced that it expects to generate earnings in the range of $9.75–$10.25 in 2016, which translates to 2.6–6.7% jump year over year. The Zacks Consensus Estimate for 2016 is currently pegged at $10.11, above the company’s guided range. Shares of Prudential slipped 0.3% in yesterday’s trading session to finally close at $83.79
For 2015, the company expects to deliver earnings between $9.50 and $9.60 per share while the Zacks Consensus Estimate stands at $10.44.
Prudential targets capital deployment of $1.5 billion through share repurchases in 2016. Apart from this, the insurer hiked quarterly dividend by 21%. Financial leverage ratio is projected within 25% and total leverage ratio is expected to be around 45%.
The insurer anticipates additional impact of 15 cents per share from technology, infrastructure and digital initiatives and regulatory costs.
The company also expects to close AFP Habitat acquisition in first-quarter 2016.
Prudential is a niche player in the life insurance market with a diversified product profile and a worldwide distribution network. Operating performance has been consistent, thanks to its high performing asset management business, widespread international operations and deeper reach in the pension risk transfer market. The company thus continues to target 13–14% long-term ROE. Though low interest rates, an underperforming group disability business, unfavorable currency impact and regulatory control remain the drags, a strong balance sheet and a balanced approach to capital management are the breathers.
In the third quarter, Prudential posted operating net earnings of $2.40 per share, missing the Zacks Consensus Estimate by 1.23%. However, the same increased 9.1% on a year-over-year basis on higher contribution from the company’s Retirement Solutions and Investment Management, and U.S. Individual Life and Group Insurance segments. A lower share count on account of the company’s continuous share buyback also aided bottom-line growth.
Prudential presently carries a Zacks Rank #3 (Hold). Some better-ranked multiline insurers worth considering are Old Republic International Corporation ORI, Assured Guaranty Ltd AGO and FBL Financial Group Inc. FFG. While Old Republic International sports a Zacks Rank #1 (Strong Buy), Assured Guaranty and FBL Financial carry a Zacks Rank #2 (Buy).
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