Is Prudential Financial a Buy?
Insurance companies are facing some major headwinds in the second quarter. Not only are they confronted with the drag on earnings from a 0% interest rate environment, the industry is also faced with unprecedented financial hardships caused by the novel coronavirus pandemic. Brian Duperreault, CEO of American International Group, said in early May that COVID-19 will be "the single largest CAT [catastrophic] loss the industry has ever seen."
Overall, insurance stocks have held up better than the overall financial sector. The average insurance stock is down about 29% year to date, compared to the average financial-sector stock, which is down 33%. Prudential Financial (NYSE: PRU) trails both with a decline of about 43% this year, through Thursday's close. Is this a stock worth buying or holding?
Prudential had a brutal first quarter with a net loss of $271 million, down from net income of $932 million in the first quarter of 2019. Earnings per share dropped from $2.32 per share a year ago to a net loss of $0.70 in the first quarter of 2020. Adjusted operating income was $939 million, or $2.32 per share, down from $1.3 billion, or $3 per share, in the first quarter of 2019. The company views adjusted operating income as a representative measure of its performance, as it takes into account ongoing operations and the underlying profitability of its businesses.
Source Fool.com
