Prudential Reports Low Earnings for 2022; Shares Undervalued

Prudential clearly missed market expectations in its results on March 15. For example, consensus' estimate for EPS, as collected by FactSet, was $0.65 and Prudential delivered $0.37. It’s quite obvious that the March 15 results are messy with shares trading down over 10% at the time of writing. However, we still believe there are an unfortunate confluence of factors that are hitting Prudential. First, under IFRS reporting standards investors only really have three years of data to work with. Second, those three years give no indication about the true earnings power of the business. For example, in 2019 Prudential earned $2.12 billion and then after it divested Jackson that swung to negative $2.04 billion the next year. The results for 2022 have clearly taken investors by surprise as earnings have shrunk to $1.01 billion. Yet, digging deeper there are also a number of positives.