Prudential Earnings: Weaker International Results and Outlook for Lower Rates Weigh on Stock

No-moat-rated Prudential Financial reported second-quarter after-tax adjusted operating income of $1.23 billion or $3.39 per share in the current quarter versus $1.14 billion or $3.09 per share in the second quarter of the previous year. The second-quarter results benefited from a higher spread income and favorable underwriting results in its US business but weaker results in the international business, and the outlook for lower rates weighed on the stock, down 10% after the company reported its results. The adjusted book value per share, which removes the affect of accumulated other comprehensive income, was reported at $98.4 per share in the current quarter, up 1.0% from the $97.4 per share in the second quarter of the previous year. The company reported a quarterly dividend of $1.30 per share, which represents approximately a 4.7% ($5.2/$110) dividend yield as of the current stock price. We are maintaining our $108 fair value estimate for Prudential Financial after incorporating the second-quarter results.