Prudential Earnings: Higher Interest Income Offset by Lower Variable Investment and Fee Income

No-moat-rated Prudential Financials’ first-quarter results marked the benefits of a higher interest rate environment that were offset by lower variable investment income, lower fee income, and elevated seasonal mortality experience. The company reported after-tax adjusted operating income of $990 million or $2.66 per share in the first quarter versus $1.19 billion or $3.10 per share in the first quarter of the previous year. The company paid a quarterly dividend of $1.25 per share in the first quarter, which represents approximately a 6% dividend yield as of the current stock price. We are maintaining our $105 fair value estimate for Prudential Financial after incorporating the first-quarter results.