Prudential Earnings: Steady Quarter as Management Continues to Steer Toward Less-Risky Businesses

No-moat Prudential Financial reported steady fourth-quarter results as after-tax adjusted operating income came in at $943 billion or $2.58 per share in the current quarter versus $932 million or $2.49 per share in the fourth quarter of the previous year. The fourth-quarter results were adversely affected by restructuring charges of around $200 million, and lower variable investment income, which was partially offset by the benefits from a higher interest rate environment. After removing the one-time charges, we think that the results in the current quarter are decent. The adjusted book value per share, which removes the impact of accumulated other comprehensive income, or AOCI, was reported at $96.6 per share in the current quarter, up 2.0% from the $94.7 per share in the fourth quarter of the previous year. The company announced a 4% rise in the quarterly dividend to $1.30 per share, which represents approximately 5.0% ($5.2/$103) dividend yield as of the current stock price. We are maintaining our $105 fair value estimate for Prudential Financial after incorporating the fourth-quarter results.