Will Prudential (PRU) Deliver A Surprise With Q2 Earnings?

We expect multiline insurer Prudential Financial, Inc. (NYSE:PRU) to beat expectations when it reports second-quarter results on Aug 3 after market close.

Why a Likely Positive Surprise?

Our proven model shows that Prudential (LON:PRU) has the right combination of the two key ingredients to beat estimates.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.40%. This is because the Most Accurate estimate of $2.50 is pegged higher than the Zacks Consensus Estimate of $2.49. A positive ESP is a meaningful indicator of a likely positive earnings surprise for the company.

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.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

Prudential’s bottom line is set to benefit from its diversified product portfolio. Strategic acquisitions and investments are expected to lead to higher premiums. International exposure that gives it more organic growth opportunities than its peers should add to the upside.

The Retirement segment is likely to benefit from a competitive edge and higher penetration into the pension risk transfer business.

Continued share buyback should boost the bottom line.

However, adverse forex and a low interest rate environment might act as dampeners. Poor disability margins are likely to weigh on the U.S. Group insurance business.

With respect to the surprise trend, Prudential missed expectations in three of the last four quarters, with an average miss of 1.47%.

Prudential’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the company’s second-quarter performance.

Other Stocks to Consider

Here are some other companies you may want to consider as these also have the right combination of elements to post an earnings beat this quarter:

Trupanion Inc. (NASDAQ:TRUP) as an Earnings ESP of +33.33% and a Zacks Rank #3. The company is scheduled to report second-quarter earnings results on Aug 2.

The Allstate Corp. (NYSE:ALL) has an Earnings ESP of +7.55% and a Zacks Rank #3. The company is scheduled to report second-quarter earnings results on Aug 3.

Manulife Financial Corporation (NYSE:MFC) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is scheduled to release second-quarter earnings results on Aug 4.