Prudential Financial, Inc. PRU remains well-poised for growth, driven by higher emerging markets earnings, improved spread income, favorable underwriting, and a solid financial position.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has gained 6.3%, outperforming the industry’s growth of 3.9%.
Image Source: Zacks Investment Research
Return on Equity
PRU’s return on equity for the trailing 12 months of 15.7% compared favorably with the industry average of 10.5%. This reflects efficiency in utilizing shareholders’ funds.
Optimistic Growth Projections
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings per share is pegged at $11.81 and $13.18, indicating a respective year-over-year increase of 24.8% and 11.6%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.1% and 0.8% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Prudential Financial’s International businesses are expected to gain from higher emerging markets earnings, a favorable impact from annual assumption update and other refinements. It aims at providing high-quality service, expanding distribution and product offerings via differentiated multi-channel distribution model as well as other businesses.
The U.S. businesses should continue to gain from a favorable and comparable impact from annual assumption update, higher spread income and more favorable underwriting.
The multi-line insurer continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In the third quarter of 2022, the company acquired a 33% minority interest in Alexander Forbes Group Holdings Limited in South Africa. This investment is consistent with PRU’s strategic focus internationally on higher-growth emerging markets. The deal furthers the partnership’s specific objective to identify and make strategic investments in high-quality financial services companies in selected African geographies.
Prudential Financial undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of the business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth.
PRU boasts a sturdy balance sheet strength that includes highly liquid assets of $4.5 billion at the end of the second quarter and a capital position that continues to support an AA financial strength rating. The company continues to balance investments in the growth of businesses with returning capital to shareholders.
The insurer has been increasing its dividend for the past 15 years. Its dividend yield of 5% compares favorably with the industry’s figure of 2.7%. In February 2023, the board authorized PRU to repurchase, at management’s discretion, up to $1 billion of its outstanding shares during the period from Jan 1, 2023, through Dec 31, 2023. As of Jun 30, 2023, 5.7 million shares were repurchased under this authorization at a total cost of $500 million.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are Old Republic International Corporation ORI, Everest Group, Ltd. EG and Radian Group Inc. RDN. While Old Republic International sports a Zacks Rank #1 (Strong Buy), Everest Group and Radian Group carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.85%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 8.3% and 5.2% north, respectively, in the past 60 days. In the past year, the insurer has gained 25.3%.
Everest Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 17.36%.
The Zacks Consensus Estimate for EG’s 2023 and 2024 earnings implies 72.7% and 24% year-over-year growth, respectively. In the past year, the insurer has gained 13.2%.
Radian’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 30.88%.
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved 5.7% and 4% north, respectively, in the past 60 days. In the past year, the insurer has gained 28%.
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