Prudential Financial, Inc. PRU is slated to report first-quarter 2018 results on May 2 after the market closes. In fourth-quarter 2017, the company delivered a positive earnings surprise of 3.46%.

Let’s see, how things are shaping up for this announcement.

Prudential Financial is expected to have witnessed bottom-line growth in the soon-to-be-reported quarter owing to recurring premium sales, expanded product offerings and broader distribution capabilities.

The Zacks Consensus Estimate is pegged at $2.99 per share, reflecting a year-over-year increase of 7.2%. To top it all, share buyback might have boosted the bottom-line upside.

With respect to the lower tax rate, the company estimates its 2018 effective tax rate on adjusted operating income at about 22% to its U.S. business earnings. The tax reduction is anticipated to favorably impact the company’s bottom line and drive margin expansion.

The Zacks Consensus Estimate is pegged at $2.99 per share, reflecting a year-over-year increase of 7.2%. Share buyback might have boosted the bottom-line upside.

The company expects better-than-expected core performance of its businesses in the yet-to-be-reported quarter, mainly fueled by higher fees in its Annuities and Investment Management segments and sustained business growth in International Insurance.

Moreover, the company might experience positive results at its Total U.S. Individual Solutions owing to higher contribution from Individual Annuities. The Zacks Consensus Estimate for pre-tax operating profit is pegged at $492 million, representing a 5.1% increase year over year.

Prudential’s Retirement segment is likely to benefit from the company’s penetration and leadership in the pension risk transfer (PRT) business.

Prudential Financial is projected to benefit from a gradually improving interest rate environment, favoring investment income from higher invested asset balances.

The company is likely to report top-line growth in the first quarter, mainly driven by the probable increase in investment income, asset management fees plus commissions and other income. The Zacks Consensus Estimate for the metric is pegged at $13.7 billion, reflecting a 3.3% rise on a year-over-year basis.

Growing Asset Under Management (AUM) has likely resulted in higher asset management fees in the yet-to-be-reported quarter.

However, increase in expenses, mainly due to higher insurance and annuity benefits plus general and administrative expenses, is likely to have weighed on the desired margin expansion.

Prudential Financial, Inc. Price and EPS Surprise

 

Prudential Financial, Inc. Price and EPS Surprise | Prudential Financial, Inc. Quote

 

What the Quantitative Model Says

Our proven model does not conclusively show that Prudential Financial is likely to beat on earnings this to-be-reported period. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Prudential Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.99. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.  

Zacks Rank: Prudential Financial carries a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. We caution against the Sell-rated stocks (4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
 
Stocks to Consider

Some stocks worth considering from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:

American Financial Group, Inc. AFG is set to report first-quarter earnings on May 2. The stock has an Earnings ESP of +4.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.  

Cigna Corporation CI has an Earnings ESP of +0.62% and is a Zacks #3 Ranked player. The company is slated to release first-quarter earnings on May 3.

National General Holdings Corp. NGHC has an Earnings ESP of +5.59% and is a Zacks #1 Ranked player. The company is slated to release first-quarter earnings on May 7.

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Cigna Corporation (CI): Free Stock Analysis Report
 
Prudential Financial, Inc. (PRU): Free Stock Analysis Report
 
American Financial Group, Inc. (AFG): Free Stock Analysis Report
 
National General Holdings Corp (NGHC): Free Stock Analysis Report
 
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