Will Prudential Financial (PRU) Beat Q4 Earnings Estimates?

We expect Prudential Financial, Inc. PRU to beat expectations when it reports fourth-quarter results on Feb 10, after the market closes.

Why a Likely Positive Surprise?

Our proven model shows that Prudential has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.44%. This is because the Most Accurate estimate of $2.28 is pegged higher than the Zacks Consensus Estimate of $2.27. The positive ESP is a meaningful indicator of a likely earnings beat.

Zacks Rank: Prudential carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating on earnings.

The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.  

What is Driving the Better-Than-Expected Earnings?

Prudential's strategic acquisitions will continue to fuel higher premium revenues through expanded product offerings in the quarter to be reported. Management expects the acquisition of the Individual Life Insurance business in particular to push the group's long-term return on equity to above 15% in 2015.

Penetration in the pension risk transfer business is likely to have favored Prudential's Retirement segment in the fourth quarter.

Continued share buyback must have also given an added boost to the bottom line.

However, the U.S. Group insurance business likely suffered on poor disability margins. Also, a low interest rate environment may have put pressure on investment income.

Other Stocks to Consider

Here are three other stocks from the finance sector which you may want to consider as our model shows that even these have the right combination of elements to post an earnings beat this quarter:  

CNO Financial Group. CNO with an Earnings ESP of +2.70% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 10.

American Capital, Ltd ACAS with an Earnings ESP of +12.5% and a Zacks Rank #2. The company will release fourth-quarter earnings results on Feb 23.

Ashford Hospitality Prime, Inc. AHP with an Earnings ESP of +9.68% and a Zacks Rank #3. The company is set to release fourth-quarter earnings results on Feb 25.
 

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