Balanced View On Prudential Financial - Analyst Blog

On April 4, 2014, we issued an updated research report on Prudential Financial, Inc. PRU.

Prudential has a well diversified business profile with reach in different markets and a broad product portfolio.

Currently, the company is poised to benefit from the aging American population. Prudential should witness a huge demand for retirement benefits products as baby boomers enter retirement.

Moreover, the acquisition of Individual Life Insurance business of The Hartford Financial Services Group Inc. HIG at the end of 2012 will help Prudential earn a place among the top five individual life insurance companies in the U.S. in terms of new recurring premium sales.

The company also has significant overseas business which is generating strong earnings.   

Additionally, Prudential's Retirement segment is set to greatly benefit from the company's penetration in the pension risk-transfer business.   

However, on the flip side, we remain watchful of Prudential's U.S. Group insurance business as poor disability margins pressurize results.

Prudential's exposure to products like annuities and universal life, which guarantees minimum return and stricter capital standards, will also likely keep its capital under strain.  

A low interest rate environment is also expected to strain the company's investment income.

Prudential is scheduled to report its first-quarter 2014 earnings on May 7, 2014. The Zacks Consensus Estimate for earnings stands at $2.27 per share, which translates into a year-over-year decline of 0.63%.

Other stocks

While Prudential Financial carries a Zacks Rank # 3 (Hold), better-ranked stocks like Kemper Corporation KMPR and FBL Financial Group Inc. FFG, both with a Zacks Rank #2 (Buy), are worth considering.