Prudential Financial (PRU 0.28%), a global leader in financial services, delivered its earnings report for the first quarter of 2024 on Monday, April 30, presenting a mix of achievements and challenges. The company's adjusted earnings per share (EPS) was $3.12, slightly below the analysts' estimates of $3.14. Still, the adjusted EPS was an improvement on 2023's Q1 result of $2.70.
This performance offers a mixed view of the company's profitability, balancing a miss on expectations with a positive growth trajectory.
Report highlights and financial overview
| Q1 2024 | Analyst Estimates | Q1 2023 | Change (YOY) | |
|---|---|---|---|---|
| Net income* | $1.14 billion | N/A | $1.46 billion | -22.2% |
| Adjusted operating income | $1.14 billion | N/A | $1 billion | +13.6% |
| Earnings per share | $3.12 | N/A | $3.93 | -20.6% |
| Adjusted EPS | $3.12 | $3.14 | $2.70 | +15.6% |
| Assets under management (PGIM) | $1.34 trillion | N/A | $1.27 trillion | +6% |
| Book value per share (GAAP) | $75 | N/A | $85.33 | -12% |
| Adjusted operating income-Retirement Strategies | $915 million | N/A | $837 million | +9.3% |
Analyst source: FactSet. * Net income refers to net income attributable to Prudential Financial. YOY = Year over year. EPS = Earnings per share. GAAP = Generally accepted accounting principles.
Prudential's business
Prudential's business scope covers a wide range, including its asset management arm, PGIM (Prudential Global Investment Management), and its robust Retirement Strategies segment. The recent growth in PGIM's AUM underscores the success of its equity market strategies and client inflows. Meanwhile, notable growth in the Retirement Strategies segment, particularly through pension risk transfer deals, illustrates the demand for Prudential's products and services.
Quarterly reflections
The first quarter was marked by tactical shifts and growth strategies. PGIM reported a 6% increase in assets under management, fueled by equity market appreciation and positive net flows. This represents a continuation of Prudential's focused efforts on expansion and diversification across its investment portfolio.
On the retirement front, the Institutional Retirement Strategies and Individual Retirement Strategies units combined reported an adjusted operating income boost to $915 million, largely attributed to higher net investment results and favorable underwriting outcomes.
Capital returned to shareholders in Q1 was $726 million (up from $718 million in the year-ago quarter). This included $250 million in share repurchases and $476 million in dividends. Dividends paid in the quarter were $1.30 per share, representing a 5% yield on adjusted book value.
Looking ahead
As Prudential looks to the future, the company has posited strategic enhancements and investment in growth areas. Despite a slight miss in EPS projections this quarter, the company's forward guidance remains optimistic, signaling confidence in its operational strategies and market positioning.
The growth in AUM and successful pension risk transfer transactions underscore Prudential's strong market position. Investors are encouraged to follow these developments closely, as they will likely play a crucial role in shaping Prudential's performance in the coming quarters.
