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Prudential Financial Inc PRU

Morningstar Rating
$97.70 +1.11 (1.15%)
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Company Report

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.

Price vs Fair Value

PRU is trading at a 8% discount.
Price
$96.60
Fair Value
$827.00
Uncertainty
Medium
1-Star Price
$541.84
5-Star Price
$92.10
Economic Moat
Kpx
Capital Allocation
Mlcmxymn

Bulls Say, Bears Say

Bulls

The company will be a net beneficiary of rising interest rates in the long run as it can reinvest its maturing fixed-income securities at a higher yield.

Bears

Prudential offers a wide range of complex insurance products that exposes it to underwriting, investment, capital market, and interest-rate risks thereby making it difficult to predict the company’s overall risk exposure, especially during periods of economic turbulence.

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News

Trading Information

Previous Close Price
$96.59
Day Range
$96.4797.97
52-Week Range
$75.42108.83
Bid/Ask
$97.68 / $97.78
Market Cap
$35.27 Bil
Volume/Avg
376,814 / 1.4 Mil

Key Statistics

Price/Earnings (Normalized)
8.43
Price/Sales
0.68
Dividend Yield
5.18%
Dividend Yield (Forward)
5.18%
Total Yield
8.41%

Company Profile

Prudential Financial is a large, diversified insurance company offering annuities, life insurance, retirement plan services, and asset management products. While it operates in a number of countries, the vast majority of revenue is generated in the United States and Japan. The company’s investment management business, PGIM, contributes approximately 15% of its earnings and has over $1.5 trillion in assets under management. The U.S. businesses are responsible for about 45% of earnings and can be classified into Institutional Retirement Strategies, Individual Retirement Strategies, Group Insurance, Individual Life Insurance, and Assurance IQ. Finally, the international business segment of the company contributes approximately 40% of earnings with a strong market position in Japan.
Sector
Financial Services
Industry
Insurance - Life
Stock Style Box
Mid Value
Total Number of Employees
39,854

Competitors

Valuation

Metric
PRU
SLF
MFC
Price/Earnings (Normalized)
8.4310.667.62
Price/Book Value
1.351.721.17
Price/Sales
0.681.521.00
Price/Cash Flow
4.7811.0911.56
Price/Earnings
PRU
SLF
MFC

Financial Strength

Metric
PRU
SLF
MFC
Quick Ratio
Current Ratio
Interest Coverage
9.1110.40
Quick Ratio
No chart available

Profitability

Metric
PRU
SLF
MFC
Return on Assets (Normalized)
1.05%1.15%0.76%
Return on Equity (Normalized)
30.65%15.43%14.83%
Return on Invested Capital (Normalized)
12.54%11.73%8.86%
Return on Assets
PRU
SLF
MFC

Insurance - Life Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
AAGIY
AIA Group Ltd ADRMkpt$101.2 Bil
AAIGF
AIA Group LtdGhnj$101.2 Bil
CILJF
China Life Insurance Co Ltd Class HDtjh$98.2 Bil
PIAIF
Ping An Insurance (Group) Co. of China Ltd Class HCcz$96.1 Bil
PNGAY
Ping An Insurance (Group) Co. of China Ltd ADRRjrsm$96.1 Bil
AFL
Aflac IncYhrgjt$47.7 Bil
MET
MetLife IncSbwp$46.8 Bil
MFC
Manulife Financial CorpTkds$35.2 Bil
PUK
Prudential PLC ADRSmwk$29.9 Bil