Prudential Financial Earnings: Higher Investment Spreads Drive Strong Quarter

No-moat-rated Prudential Financial posted a good set of numbers in the third quarter. Aftertax adjusted operating income was $1.26 billion, or $3.44 per share, versus $0.89 billion, or $2.37 per share, in the year-ago quarter. These results reflect the benefits from higher interest rates, more-favorable variable investment income, and underwriting experience, partially offset by lower fee income. Adjusted book value per share, which removes the impact of accumulated other comprehensive income, was reported at $94.20, down 2.3% from $96.40 in the third quarter last year. Prudential paid a quarterly dividend of $1.25 per share, which represents approximately a 5.4% dividend yield at the current stock price. We are maintaining our $105 fair value estimate after incorporating third-quarter results.