Prudential Financial and Hartford prepare to report fourth-quarter earnings, with insurance stocks in favor as the Federal Reserve prepares to launch a rate hike cycle. Prudential stock and Hartford stock traded flat to higher afterhours, near buy points.
Insurance Stocks
Insurance stocks tend to benefit from rising interest rates, and are showing strength as Fed hikes loom. Insurance companies selling products that guarantee a set return, such as fixed annuities, benefit the most from higher rates.
In addition, defensive stocks are in favor as investors look for safe havens in a choppy market. Insurance tends to be a defensive, stable business through market cycles. Defensive stocks add ballast to a growth-heavy portfolio, led by tech plays.
Prudential Earnings, Prudential Stock
Estimates/Results: Wall Street projected Prudential earnings sliding 20% to $2.36 per share, according to FactSet. Earnings came in at $3.18 per share, a 9% gain.
Shares of Prudential Financial dipped 1.2% to 113.39 on the stock market today, holding above the 50-day line. Prudential stock failed a breakout past 115.62 during the market's late January correction, but has formed a new 118.08 handle buy point. Shares edged up 0.5% after the close.
The relative strength line for PRU stock has risen back to just below the May 2021 high, according to MarketSmith chart analysis. The RS line has risen after a multiyear downtrend.
The coronavirus pandemic hit Prudential Financial's underlying businesses heavily in 2020. The company, which offers life insurance and other financial products, responded by cutting costs, including asset sales. It has also focused on selling higher growth, less market-sensitive products.
IBD Live: A New Tool For Daily Stock Market Analysis
Hartford Earnings, Hartford Stock
Estimates/Results: Analysts expected Hartford earnings to sink 13% to $1.53 per share. Sales were rising 1% to $5.381 billion. Actual earnings were $2.02 per share, a 15% jump. Sales ere $5.82 billion, a 9% increase.
Shares of Hartford lost 1.3% to 72.19 Thursday, also holding above the 50-day line. Hartford stock is forming a cup base with a 78.27 buy point but is 7% below the entry for now. Investors could use 73.48 as an early entry. The RS line for HIG stock has rallied nicely this year after a slide in 2021. Shares held effectively flat in Thursday's extended traded.
Both PRU stock and HIG stock boast strong 90 RS Ratings. That means they have outperformed 90% of all stocks in the past year. Highland has a 91 IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score. Prudential's CR is 87.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
