Will Prudential Pull Off a Surprise in Q2 Earnings?

Prudential Financial, Inc. PRU is slated to report second-quarter 2024 earnings on Aug 1, after market close. PRU delivered a negative earnings surprise in the last reported quarter.

Factors to Consider

The U.S. business is likely to have gained from higher spread income, driven by business growth and the benefit of higher interest rates and variable investment income, as well as more favorable underwriting results.

Prudential Financial's international businesses are likely to have benefited from higher net investment spread results and higher earnings from joint ventures and other operating entities. The upside is likely to have been partially offset by lower underwriting results.

Group Insurance business in the to-be-reported quarter is likely to have benefited from more higher underwriting results and higher net investment spread results. The upside is likely to have been partially offset by higher expenses.

PGIM is likely to have gained from equity market appreciation and tightening credit spreads. The upside is likely to have been partially offset by the impacts of higher interest rates and unfavorable foreign exchange rates.

Assets under management are likely to have benefited from equity market appreciation and tightening credit spreads, partially offset by net outflows.

Net investment income is likely to have gained from higher reinvestment rates, higher non-coupon income and growth in indexed variable annuities. The upside is likely to have been partially offset by higher operating and variable expenses. We expect net investment income to increase 7.4% to $4 billion in the to-be-reported quarter.

Expenses are likely to have increased because of higher general and administrative expenses, amortization of deferred policy acquisition costs and interest credited to policyholders' account balances. We expect total expenses to be $11.5 billion.

The Individual Retirement Strategies business is likely to have benefited from higher net investment spread results due to higher reinvestment rates, more favorable short-term interest rates and growth in indexed variable annuities.

The company estimates earnings per share to be $3.36 for the second quarter of 2024.

The Zacks Consensus Estimate for earnings per share is pegged at $3.43, indicating an increase of 16.6% from the year-ago period's reported figure.

The Zacks Consensus Estimate for revenues is pegged at $13.78 billion, indicating a decrease of 9% from the year-ago quarter's reported figure.

What Our Quantitative Model Unveils

Our proven model predicts an earnings beat for Prudential Financial this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Prudential Financial has an Earnings ESP of +0.11%.

Other Stocks to Consider

Some other insurance stocks with the right combination of elements to deliver an earnings beat this time around are:

Kemper Corporation KMPR has an Earnings ESP of +14.77% and sports a Zacks Rank #1 at present. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at $1.27, indicating a year-over-year increase of 25.7%.

KMPR's earnings beat estimates in two of the last four reported quarters and missed in one and matched in one.

Oscar Health, Inc. OSCR has an Earnings ESP of +3.23% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 16 cents, indicating a year-over-year increase of 328.5%.

OSCR's earnings beat estimates in each of the last four reported quarters.

Fidelity National Financial, Inc. FNF has an Earnings ESP of +1.61% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at $1.27, indicating a year-over-year increase of 25.7%.

FNF's earnings beat estimates in one of the last four reported quarters and missed in the other three.

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